What is the organizational structure of an S corporation?
The organizational structure of an S corporation includes three groups: shareholders, directors and officers. An S corporation is owned by shareholders; however, they do not typically directly manage the company. Instead, they influence corporate decisions through electing and removing directors, approving or disapproving amendments to the Articles of Incorporation and voting on major corporate issues. The directors, who comprise the “board of directors,” are responsible for managing the affairs of the S corporation. They usually make only major business decisions, and appoint and supervise officers, who make the day-to-day business decisions. Officers are responsible for the everyday company management. Note: A shareholder may serve on the board of directors and as an officer. In fact, most states allow S corporations to have only one shareholder, who also serves as the sole director and officer. This is very common for S corporations who only have one or a few shareholders.
