A S corporation must meet the following legal requirements:
  1. Be a domestic corporation
  2. Have only allowable shareholders, including individuals, certain trusts, and estates and
  3. Not more than 100 shareholders
  4. Have only one class of stock
  5. Not be an investment company
  6. Not be an international sales corporation
  7. Elect to be taxed as an S corporation by filing Form 2553 with the IRS.

Additionally, S corporations must adhere to corporate formalities such as holding shareholder and director meetings, and keeping minutes of those meetings.