Operational Considerations for S Corporations in Minnesota
The management of an S Corporation is generally identical to that of a C Corporation. A board of directors oversees the major business decisions, while officers handle the day-to-day operations. Minnesota law requires at least one director and two officers: a president and a secretary.
Offering employee benefits in an S Corporation can be more complicated due to the IRS's scrutiny to ensure that benefits are not disproportionately favoring higher-earning employees or shareholders. Consider offering standardized benefit packages to avoid any discriminatory practices.
Minnesota law mandates that S Corporations maintain accurate records, such as meeting minutes and financial statements. Failure to keep these could result in the state revoking your S Corporation status.
Business Licenses and Permits
Depending on the type of business and where it's located, additional state and local licenses may be required. Check with your local government and consult with an experienced business succession attorney for customized advice tailored to your situation.
Estate Planning and S Corporations in Minnesota
Transferability of Shares
The shares of an S Corporation in Minnesota are generally transferable. However, transferring shares can affect the S Corporation status if the new shareholder is not a qualified owner. Prior to any transfer, review your shareholder agreement and consult with your estate planning attorney.
Impact on Estate Taxes
An S Corporation has an impact on the estate planning process. The value of the shares owned will be included in a shareholder's estate and could potentially subject the estate to taxes. To navigate this, setting up a proper estate plan can help.
Integration with Trusts
S Corporations can be integrated into different types of trusts for effective estate planning. Types of trusts that can hold S Corporation shares include revocable trusts and special needs trusts.
Dissolution of S Corporations in Minnesota
If the shareholders decide to dissolve the S Corporation, a resolution must be adopted, and appropriate documents must be filed with the Minnesota Secretary of State. Outstanding debts must be paid off before assets are distributed among the shareholders.
In extreme cases, an S Corporation can be dissolved involuntarily by the state for failure to meet legal requirements or by court order if it's proven that the directors are acting in a manner detrimental to the shareholders.
After dissolution, the company must settle all debts and distribute remaining assets among shareholders. You will need to file final tax returns and close out any business accounts. Consulting a qualified probate attorney can make this process smoother.