How to Setup Directors in an S Corp in California

By Mark Kennan

An S corporation, similar in many ways to a standard C corporation, elects to be taxed as a pass-through entity by the Internal Revenue Service rather than to pay corporate income tax. When you file articles of incorporation in California, you must also file Form 2553 with the IRS to confirm the S corp election. Corporate statutes, in the state where a business is formed, govern S corporation management. As such, California corporate law sets forth the rules for setting up a board of directors.

Step 1

File articles of incorporation with the California Secretary of State. List the initial board of directors on the articles of incorporation. If you prefer to elect a board of directors at the first meeting, list the company's founders instead. The founders -- referred to as incorporators in California law -- may serve as the directors until a full meeting of the shareholders takes place. Their responsibilities will include running the initial election of the directors.

Step 2

Call a meeting of the shareholders. California law states that shareholders must receive notice of the meeting at least 10 days in advance.

Ready to incorporate your business? Get Started Now

Step 3

Vote on the candidates nominated for each position on the board of directors. Adopt bylaws that specify term limits and the process for electing board members. These provisions also can include board member qualifications.

Step 4

Record the annual meeting's minutes and file them in the corporation's records to document the election of the board.

Ready to incorporate your business? Get Started Now
How to Remove an Officer From Articles of Incorporation
 

References

Related articles

What Are the Benefits of a S Corp Vs. an LLC?

Minimizing tax obligations and limiting legal liability are among the most important factors to consider in choosing a legal structure for your business. Depending on your particular circumstances, either an "S corporation" or a limited liability company, also called an LLC, may provide the most advantageous structure for your business.

Can a Nonprofit Board Fire the Executive Director?

A nonprofit's success is often tied to the zeal of its primary representative: the executive director. The ED is typically the face of the organization and manages its day-to-day affairs. When the executive director is also the organization's founder, it can seem that the ED has unlimited power over the organization. However, the executive director is just an employee of the nonprofit who holds the position subject to the approval of the board of directors.

Can an Owner Be Voted Out of an S Corporation?

S corporations are corporations that have made a special election with the Internal Revenue Service to be taxed only at the individual shareholder level rather than at both the corporate and individual levels. Owners of the company, known as shareholders, do not participate directly in business operations and may not be voted out. If a shareholder takes on an additional function as a director or officer, he may be removed from that position. However, this removal does not affect the shareholder's ownership in the company.

LLCs, Corporations, Patents, Attorney Help

Related articles

Does a Nonprofit Report to the State When the Board Members Change?

State law determines whether a nonprofit must notify its state regulatory agency, usually the Secretary of State, of ...

How to Remove an Officer of a Corporation

The individuals charged with making important strategic and financial decisions for a corporation must act based on the ...

How to Get an S-Corporation Enterprise

An S corporation is a corporation that has been approved by the IRS to be taxed under Subchapter S of the Internal ...

How to Amend Bylaws in a New York Law Corporation

A corporation's bylaws set its internal rules and procedures. For example, bylaws usually include rules for the ...

Browse by category
Ready to Begin? GET STARTED