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Dear Lynda:
The process of adding an officer to a corporation is one of those
"formalities" I often talk about with respect to documenting corporate
decisions and maintaining corporate records. For purposes of this discussion
I will assume that your brother-in-law's S corp is currently a one-man show
wherein he is both a shareholder and a director of the corporation. Now,
since it is the board of directors that elects officers in a corporation,
your brother-in-law will have to put on his hat as a director and sign a
board resolution approving the appointment of his brother as an officer of
the corporation. This resolution will go into the corporate records book.I
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Most states require corporations to file some sort of annual report that
lists the current directors and officers of the corporation. If this is the
case in your brother-in-law's state of incorporation, he will list his
brother as an officer on the report.
That takes care of the corporate officer appointment. Apart from that,
there is the issue of his brother's status as a new employee of the
corporation. An officer who performs services on behalf of the corporation
is considered to be an employee for tax purposes, so your brother-in-law
will need to ensure compliance with federal and state employment and payroll
tax regulations. See IRS Publication 15 (Circular E), Employer's Tax Guide
for information on federal payroll tax withholding and reporting
requirements.
Chrissie Mould
About the PowerHomeBiz.com Guide:
 Chrissie
Mould has over a decade of experience in business administration and
startup business consulting. As a startup business consultant, she helped
launch companies in the IT, consulting and telecommunications industries.
Prior to that, she held senior management positions at several public and
private companies, overseeing corporate administration and governance
issues. She is an incorporation specialist and CEO of New Ventures, LLC. The
company provides low-cost incorporation services to entrepreneurs and small
businesses. Visit www.MyNewVenture.com
to incorporate or form an LLC.
The opinions expressed in this column are those of the
author, not of PowerHomeBiz.com. Users should not treat the Guide's response as
legal, accounting, or professional advice as all answers are intended to be
general in nature. Such advice can only be properly given by qualified
professionals who are fully aware of a user's specific geographical areas or
circumstances, such as an attorney or accountant.
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