Structures

The general structure of an Incorporated entity consists of The Board of Directors, the Officers, and the Shareholders. The Board of Directors is elected by the shareholders with one vote per share being the norm. This way the investor with the most invested in the business has the most say in who get elected to the Board. Remember hearing about the aggressive takeovers, that is what happens when some entity buys enough of the shares in a company to take over the control of the Board. The Board sets the Bylaws that specify the structure of the company, sets the rules that the officers of the company are required to operate under as well as appointing the officers themselves. The Officers, the President, Treasurer, Secretary, and the Vice Presidents, run the daily affairs of the business per the direction of the Board of Directors and the Bylaws. The Shareholders buy the shares, giving the company operating and expansion revenue.

An S-Corp or Sub Chapter S Corporation has the same structure as a C-Corp except that it has less than 75 Shareholders and has applied to and received a special tax status form the IRS. This status allows the income to the Corporation to be spread out to the shareholders as if it were a partnership through dividend distribution.

A Limited Liability Company LLC is structured as defined in its Articles of Organization by the Members (the owners). This can follow several management techniques. Ranging from equal status and authority by each Member to one person being appointed to manage the entire operation that is not a Member. The IRS treats multiple owner LLCs as partnerships and single owner LLCs as sole proprietor businesses and the income is taxed regardless if the funds are distributed or not. An  LLC can also elect to be taxed as a corporation if it files the proper forms with the IRS and could reduce its tax burden because of the lower tax rates on low income corporations.