Change an employee's 2% shareholder status - S-corps

If your business is listed as a sole proprietorship or an LLC in Gusto, you can change your employee's S-Corp owner status in Gusto. If your company (entity) type needs to be updated in Gusto so you can proceed with the next steps, follow the steps in this article first

It's important to accurately enter an employee-owner's 2% shareholder status because this affects how their health insurance premiums are taxed and affects eligibility for other benefits.

Directions for changing an owner's status can be different depending on when you’re updating the shareholder's status—read the following three options and choose which closest to your situation.