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

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

If your benefits are not managed by Gusto:

  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 next to 2% Shareholder.
    • Please note: You'll need to contact in order to change the designation to “No” so we can work through tax implications with you.
  5. Click Save.

If your benefits are managed by Gusto, reach out to our benefits support team at so we can work through any changes in benefits eligibility that may result.

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