QUESTION on How to Add an Officer to an S Corporation
My brother in law has a new S Corporation and he wishes to add his brother as a officer. How can he add an officer to an S Corporation?
– Lynda (New Jersey)
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
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.
Recommended Books on S Corporation:
- Practical Guide to S Corporations (Fifth Edition)
- S-Corporation: Small Business Start-Up Kit
- Taxation of S Corporations in a Nutshell (In a Nutshell (West Publishing))
- S Corporation Taxation (2012)