Required Officers for a Corporation
By: Chelsea Boozer
In business incorporations you are required to appoint officers. A state’s corporation statue will detail which officers are obligatory of a corporation, but each state will almost always mandates a president, secretary, and treasurer. However, a single individual can hold each position. But what are officers responsible for within the corporation?
Legislative requirements of each office role are commonly included in every state’s corporation statue. The commitments of an officer are detailed under the bylaws. The overall functions of an officer are thus:
President or CEO. Every office position is assigned by the Board of Directors. The president or CEO of a business incorporation is steered by the Board. He/she will be in charge of the overall activities of the corporation. The CEO will be signing any major contracts or legal documents concerning the corporation. Some managing roles of the CEO can be allotted to other officers as it is seen necessary. CEO’s of business incorporations can also be voting members of a board while being the corporation’s CEO. Another option is the “ex-officio” status. The CEO can take this status and partake in board meetings but will not be eligible to vote.
Vice President. A Vice President is not always demanded of a corporation by a state’s corporation statue. In a situation where this officer role is required, the Vice President will step in when the CEO is otherwise engaged. The Vice President can also be assigned further responsibilities by the Board.
Treasurer. A Treasurer is in charge of all financial matters of a corporation. He/she will often deal with monetary affairs daily, but in some cases will only be needed to oversee all financial activity. A Treasurer must give detailed reports on monetary issues and budgets to the officers, the Board, and investors.
Secretary. The Secretary is required to keep minutes at all shareholder’s meetings and meetings of the Board. The corporation’s corporate records are kept by the Secretary. Often a Secretary must be able to supply copies of corporate documents upon request, and sometimes they must bestow certification for financial establishments such as a bank.
Is an officer liable for their actions? No, not when they are rightfully acting in aid of the corporation; and furthermore, primary officers are able to legally bind the corporation.
Are business incorporations required to pay an officer a larger salary? No. Some corporations provide compensation for their employees performing special duties. For example, the company can increase salary, offer stock options, present health insurance, or provide equipment such as phones, computers, or vehicles. The bigger the business incorporation the more common this will be. The corporation will often offer an Employment Agreement which sets forth the rules for compensation and what duties the employee must fulfill. The IRS can veto compensation by deducting a corporation’s tax return if they perceive that an officer is collecting irrational compensation.
Are you currently forming a business incorporation and deciding on officer positions? It would benefit you to look at your state of incorporation’s corporation statue and review the required officers of that state and their duties; if you need help deciding what to look for when appointing officers, check out our other articles on EZOnlineFiling.com