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The Corporation Overview

A Corporation is a traditional corporation where the profits of the business are reported and taxed separately from the owners/ shareholders of the company. Corporations are owned by the shareholders, who select a board of directors to manage the business. This type of company structure provides many benefits to business owners, including liability protection for business debts as well as tax benefits.

Corporation profits may be held by the company for business growth or may be distributed to the shareholders as dividends. When distributed, dividends are taxable for both the corporation and the shareholders, a situation known as “double taxation.” The C-corporation is a popular business structure for companies with complex operations, numerous shareholders, or those businesses planning to sell stock on the public stock exchanges.

Businesses organized as Corporations will need to hold regular meetings of the company’s board of directors, keep accurate minutes for board meetings, and file separate tax returns for the corporation. Small businesses should also consider and review the benefits of a S-corporation or Limited Liability Company (LLC) for their company’s needs and resources.

S-Corporation Overview

An S-corporation (sometimes called a “subchapter-S” or “small business” corporation) is a business structure that provides business owners with limited liability for corporate debts while also allowing the shareholders to pass company income through to their personal tax returns. The S-corporation is a very popular structure for small businesses.


Businesses structured as C-corporations are owned by the company’s shareholders. The shareholders own stock in the company and vote for a board of directors to oversee the management of the business. Shareholders also must approve major business decisions such as mergers and corporate dissolution.

The board of directors of a C-corporation provides governance for the company and elects the officers of the corporation. Companies are required to hold regular board meetings and keep accurate meeting minutes. The corporations’ board of directors sets the strategic direction for the company and hires/fires the company’s top level managers.

The officers of a C-corporation are responsible for the daily operations of the company. They are members of the board of directors and serve at the pleasure of the board. Most corporations are required to have a president, secretary and treasurer, and may include additional officers such as multiple vice-presidents.

In smaller corporations, the business’s owners or founders may hold more than one of these positions.


The owners of an S-corporation are called shareholders. The shareholders elect a board of directors who provide governance and oversight to the company’s management team. The board also appoints officers to serve as the company’s executive management. These officers normally include a president, secretary and treasurer. Some small companies are structured as S-corporations, in practice, the owners of an S-corporation may serve as the company’s shareholders, board of directors and officers, as well as employees.

Note: S-corporations are limited by law to no more than 75 shareholders (husband and wife shareholders count as 1 shareholder for the purposes of this limit), and all shareholders must be US citizens or legal residents. Shareholders in an S-corporation may sell or transfer their stock at any time.