If the number of shareholders is three or more, then the corporation must have three directors. If the corporation has less than three shareholders, then the number of directors may equal the number of shareholders. A corporation is a legal entity that exists separately from its owners. Instead, they influence corporate decisions through indirect methods such as electing and removing directors, approving or disapproving amendments to the articles of incorporation and voting on major corporate issues. The board of directors are responsible for managing the affairs of the corporation.
Officers are responsible for the everyday management of the corporation.
Typically, officers are appointed directly by the board of directors. It is important to note that a shareholder may serve on the board of directors and as an officer. In fact, in most states one person is enough to form a corporation. What is an S Corporation Standard business corporations or C corporations are required to pay income tax on taxable income generated by the corporation. Making a Subchapter S election by completing and filing federal form 2553 with the IRS is a way to avoid having your corporation treated as a separately taxable entity.