If you decide to incorporate your business, you will soon find that all the paperwork, terms, conditions, and titles can be slightly confusing. In order to become a corporation you need an organizational structure that is comprised of shareholders, a board of directors, officers and a registered agent. If you have no idea what any of those are, that’s okay. Let’s take a quick look…
Simply put, a shareholder is someone who owns stock in the corporation. Specific laws governing rights and insurance of shareholders can vary from state to state, but generally shareholders have the responsibility of meeting at least once a year and electing directors, as well as aiding in major decisions of the corporation. Shareholder roles look different in larger corporations versus smaller ones. For many small businesses, the owner is the sole shareholder, sole officer, and sole director of the corporation.
Board of Directors
A corporation’s Board of Directors is the major decision making body of the corporation and is in charge of electing officers of the company, setting employment terms, amending bylaws and aligning mergers. Members of the Board can also serve as officers and shareholders. In small businesses, the board of the directors is often comprised of the officers of the corporation.
Officers are responsible for the day-to-day operations of a corporation, and are elected into their positions by the Board of Directors. Most corporations have as least three officer positions: President, Treasurer or CFO, and Secretary. Again, in the case of many small businesses, one person may hold all the officer positions. Officers don’t have to be on the Board of Directors or shareholders, but they can be.
This person is simply the individual responsible for receiving any of the legal paperwork from the state. The registered agent must live in the state of business and be available during normal business hours. If your corporation’s business crosses state lines as a foreign qualified corporation, you will need a registered agent in each state.
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