Because there are obvious benefits to an S corporation, the requirements to form one can be tricky. According to the tax code, an S corporation must be domiciled in the United States, have no shareholders that are partnerships, corporations, or non-resident aliens, they cannot have more than 100 shareholders, and they cannot have more than one class of stock.
Because an S corporation is still a corporation, it must also comply with the regular features of a corporation. Meaning, Articles of Incorporation must be filed with the secretary of state, a board of directors must be appointed, meetings must be scheduled, and other legal protocols unique to the corporate structure. Continuing to comply with these corporate requirements is just as, if not more, important than meeting the formation burdens. Failing to do so could result in a loss of limited liability status.