Small business corporation

A small business corporation, despite its size, still has most of the benefits enjoyed by big major corporations. In a small business corporation, one person often runs it all similar to a sole proprietorship legal form. Some family owned businesses prefer to incorporate themselves as major corporations compared to small family owned business. Many family owned businesses incorporate for tax purposes and asset protection purposes. Before incorporating a small business corporation, you should check with the state you want to incorporate how to form a small corporation in that state.

One person small business corporation

In all states, one person in a small business corporation may simultaneously serve in more than one of the corporate capacities. For example, if you form your own one person small business corporation (most states allow you to form a very small business corporation even if you are the only person in the small business corporation), you will be your corporation’s only:

• incorporator,
• director,
• shareholder, and
• all the required corporate officer positions.

Directors and officers of the small business corporation

In all states, a small business corporation may have just one director and just one shareholder, but in some states the number of directors cannot be less than the number of shareholders if the small business corporation has three or fewer shareholders. In these states,

• if your small business corporation has three or more shareholders, your small business corporation must have at least three directors;
• if your small business corporation has two shareholders, your small business corporation needs two directors;
• if your small business corporation has just one shareholder, your small business corporation may have just one director.

The “Director and Officer Rules” section of your state sheet tells you how many directors and officers are required in your small business corporation by your state.