How to change your employee's S-Corp owner status

If an employee's status as an S-Corp 2% Shareholder changes as any time, you can update this in your employee's profile. It is important to accurately enter an employee-owner's 2% shareholder status, because this affects how their health insurance premiums are taxed.

To make an update:

  1. Navigate to the People tab.
  2. Click on your employee's name.
  3. Click edit next to the Employment Details section.
  4. Select Yes or No next to 2% Shareholder.
  5. Click Save.

If you have questions and your benefits are managed by Gusto, reach out to our Benefits Care team at If your benefits are managed externally and you have questions about the payroll implications of your S-Corp status, reach out to our Payroll Care team at


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