S Corp Titles: Everything You Need to Know
Learning S corp titles is important when you are preparing to start a company. 3 min read
2. Roles and Responsibilities
3. Types of Corporate Officers
Updated July 8, 2020:
Learning S corp titles is important when you are preparing to start a company. When a business decides to incorporate, they have to decide on appropriate position titles. Some titles to consider, per the Articles of Incorporation, include president, secretary, and treasurer, but the owner can still come up with a different title for day-to-day business matters.
If you incorporate as a single owner, you're still required to find someone to fill each of the mandatory seats in the organization structure.
S Corporation Management Structure
To become an S corporation, you need to file IRS Form 2533 which is Election by a Small Business Corporation. S corporations start like other corporations in the United States — by filing the Articles of Incorporation with the respective Secretary of State office where the business is located. When filing the Articles of Incorporation, the person who files them designates the names of owners (shareholders) of the company.
Roles and Responsibilities
States may require additional information, such as names of officers like the president, treasurer, and secretary. The president should be the one with the authority to run the entire company unless there is a written agreement that says something different.
While you can incorporate a business with only a single person in some states, you should check state requirements for incorporation as some states note that if there is more than one shareholder, there must be additional directors. If the corporation has one shareholder, that individual may be the only director and still hold all other office positions. With an S corporation that has a single shareholder, he or she can be called the president, CEO, or another title.
S corporations with more than one shareholder can issue titles at the time of formation. If you don't elect to name them at the time of incorporation, you must specify them, along with responsibilities, in the Shareholder's Agreement or corporate bylaws. These titles remain intact after electing to form the S corporation status.
While S corporations don't need to specifically use the title of "president," someone must occupy that role. Many companies prefer to use CEO rather than president these days.
Naming the board of directors is one of the first steps with a new corporation. After a corporation is active, shareholders typically elect board members at meetings. A board of directors handles or directs a corporation's day-to-day activities. Some of the requirements of a director include:
- Acting on the corporation's behalf, exercising a "duty of care" at all times
- Must be loyal to the corporation and its shareholders
- Be an active participant in meetings with the board of directors
- Can approve some activities and business transactions
- Amend the corporate bylaws if necessary
A small corporation often only has one director versus large corporations who can have eight or more people serving on the company's board of directors. To avoid issues with voting, it's wise to keep an odd number of directors on the board.
Corporate officers are typically appointed by the board of directors. Positions can vary, but some of the more common corporate office titles include:
- Chief Executive Officer (CEO) or President
- Chief Financial Officer (CFO)
- Chief Operating Officer (COO) or Secretary
Shareholders have ownership interest in the company, which means they invested in the business. When a corporation is initially formed, the owners are typically its first shareholders. In smaller businesses, the original investors typically remain sole shareholders throughout the life of the business.
No matter how many shareholders a corporation has, each one typically receives a certificate of stock which identifies how many shares that investor owns. It's usually required that corporations have annual shareholder meetings. It is during these meetings that shareholders will elect directors.
Types of Corporate Officers
There can be different levels of corporate officers, but the main four traditionally are:
- President: Typically, a corporation's president handles day-to-day operations and acts as the general manager.
- Vice President: If there is a vice president, he or she only acts in the absence of the president, although the vice president can also have their own special duties.
- Treasurer: The corporation's treasurer is responsible for accounting and handles corporate funds.
- Secretary: The secretary takes minutes at meetings and handles corporate records. He or she may also handle corporate stock and the stock transfer book.
The formalities associated with maintaining a corporate structure can seem complex to smaller businesses and even bizarre for a business with only a single shareholder.
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