Ownership can be transferred by selling stock in the corporation. The sale of stock is sometimes subject to state and federal securities laws. Colorado S corporations can get additional capital easier than some of the other types of business since you can issue and sell stock, or a variety of other financial instruments, as evidence of interest in the corporation. There are exceptions to shareholders’ limited liability where shareholders can be held liable. Protection of Colorado S Corporation shareholders’ personal assets is one of the major reasons State business owners choose to incorporate. Colorado S Corporation shareholders cannot normally be held liable for legal judgments against the corporation, or for any of the corporation’s debts or obligations. Colorado S Corporation shareholders normally enjoy limited liability and can lose no more than the amount they invested in the corporation. Colorado S corporations cannot have more than 100 shareholders shareholders cannot be other corporations, Limited Liability Companies (LLCs), partnerships, certain trusts or non-resident aliens. You must hold and keep minutes that document meetings of the stockholders and board of directors. There can be some limitations as to the kind of business Colorado S corporations are allowed to conduct. A Colorado S corporation is considered, by law, to be an individual entity separate from its owners (shareholders). Form 2553 electing special tax status must be filed with the IRS. Official documents must be filed with the state in order to form a Colorado corporation, and state filing fees must be paid. Important Points to Consider When Forming a Colorado S Corporation MaxFilings can help you with filing the IRS Form 2553 by preparing the form and sending it to you with instructions for completion and filing with the IRS. Only Arkansas, New Jersey, New York, Ohio and Wisconsin require state level filing in addition to IRS filing. In very few states, you will also be required to file a separate state election, as specified by that state, in order to qualify as a Sub S Corporation. To qualify as an S corporation in Colorado, an IRS Form 2553 must be filed with the Internal Revenue Service. 
While an S corporation with more than one shareholder does file tax returns, the individual shareholders (owners) must include their share of the corporation’s income or loss on their personal tax returns, just as is done in sole proprietorships, partnerships and Limited Liability Companies (LLCs).
Unlike C corporations, a Colorado S corporation does not itself pay any income taxes. Save all of your incorporation information until you’re ready to incorporate. Start setting up your Colorado S corporation now There are absolutely no “hidden charges” to surprise you later. It includes all state fees and other charges. For example, one exception to a shareholder's limited liability occurs when the corporation has recklessly harmed people or has been used to perpetuate fraud.Īt MaxFilings, our competitive pricing is simple and straightforward. There are exceptions to shareholders’ limited liability to keep in mind. But if that property still does not satisfy the judgment, incorporating as an S corp will ensure that they will not be able to take a shareholder’s personal assets (i.e.
Should someone sue the corporation and the corporation is found liable, they can take the corporation’s property to satisfy the judgment. If the corporation goes bankrupt, the shareholders will not be liable for its debts. Normally, shareholders cannot lose more than the amount they invested in the corporation. Protection of shareholders’ personal assets is one of the major reasons Colorado business owners choose to incorporate.
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