Owner of the corporation

Incorporating a partnership (continues...)

For instance, if a business is a two-person partnership and the business owner and his or her partner are equal partners, the corporation ’s stock would be issued one-half to each business partner. However, the allocation of stock does not always has to be that way for a two people partnership. It can be any way that the business owner and his or her partner wish. For instance, it may be that one of the business partners wants to retire and part of the retirement process could be to incorporate and issue a smaller percentage of the stock to the retiring business partner.

Incorporating a new business corporation

If a business owner is starting a business as a corporation from day one, the business owner's choices as to who will own stock in the  corporation are unlimited. Bear in mind, though, that if the business owner intends to elect S corporation status, the corporation is limited to eligible stockholders such as individuals and certain specific trusts and estates.

Issue and transfer of stock

Whether a business owner is incorporating a new or old business, note that it is much easier to issue stock or to transfer stock to a new stockholder than it is to retrieve the stock. In other words, do not be in a rush to issue any stock in the corporation to other individuals until you are confident they are the individuals with whom you want a long term business relationship and that they will be motivated by an opportunity to share in the growth of your business.