How Many People Do You Need to Form a Corporation?

In most states, you only need one person to form a corporation. Other state requirements vary, but usually no more than three are required to legally incorporate.

As part of creating your corporation, you’ll be required to fill out and file what are known as Articles of Incorporation. Your state might also call this document the Charter or Certificate of Incorporation. This document will specifically dictate how many owners are required to form the corporation. The majority of states only require one owner to file the Articles of Incorporation.

Some states may also require that the number of corporate directors match the number of owners. In the case of a single owner, you will also need to name yourself as a director. If your corporation has multiple owners, you will be required to name an equal number of directors. The same rule for single ownership can apply with multiple owners; you can simply name each owner a director if you wish. The most typical means of getting around the multiple owner rule is to name your spouse and another trusted relative as owners of the corporation. Naming trusted family members or business partners is typically the safest bet.

An S corporation is a corporation designed for those intending to keep their business small. The requirements associated with an S corporation are simple. As the owner, you may not issue stock to more than 35 people, all of whom should be close friends and family. The major advantage of filing as an S corporation as opposed to a standard C corporation is that you will not be required to file your shares with the Securities & Exchange Commission (SEC).

If you are considering filing as a corporation or have other business filing related questions, contact a business attorney for assistance. Forming a business structure is a big step and a lawyer can provide the legal framework that best suits your particular business.

Case Studies: Forming a Corporation

Case Study 1: Single-Owner Incorporation

In most states, you only need one person to form a corporation. John Smith, a resident of California, decided to start his own business and formed a corporation named Smith Enterprises.

He filed the Articles of Incorporation, which outlined the details of his corporation. Being the sole owner, John also named himself the director of the corporation. This case demonstrates how a single individual can establish a corporation legally.

Case Study 2: Multiple Owner Incorporation

Some states have requirements for multiple owners to legally incorporate a business. Sarah and Michael Johnson, two friends with a shared business vision, decided to form a corporation called Johnson & Johnson Ventures.

They filed the Articles of Incorporation and named themselves as directors of the corporation. By following the state’s regulations, Sarah and Michael successfully formed their corporation with multiple owners.

Case Study 3: S Corporation Requirements

An example that chose to file as an S corporation is “Ben’s Bistro.” The owner, Ben Johnson, decided to structure his restaurant business as an S corporation to take advantage of the tax benefits and avoid the requirement of filing shares with the Securities & Exchange Commission (SEC). By adhering to the S corporation requirements, Ben’s Bistro was able to operate efficiently while enjoying the benefits associated with this business structure.