All shareholders of an S Corporation must:

All shareholders of an S Corporation must be individuals who consent to S Corporation status. This is a fundamental requirement under the Internal Revenue Code for S Corporations, which are a special type of corporation that allows income to pass through to shareholders and be taxed at their individual rates, thus avoiding double taxation that typically occurs with C Corporations.

To establish S Corporation status, all shareholders must agree to make the election for the corporation to be treated as an S Corporation, and they must meet specific criteria set forth by the IRS. This includes being a U.S. citizen or resident, and typically, there cannot be more than 100 shareholders. The structure is designed to ensure that the benefits of being an S Corporation, such as avoiding double taxation and benefiting from pass-through income, are preserved for individuals rather than corporations or other entities.

The requirements are aimed at maintaining the integrity of the S Corporation designation, ensuring that it aligns with its intended purpose of benefiting small business owners and closely held companies.