If you’ve decided to form a corporation, congratulations to you! You’re on the right track to protecting yourself and taking your business more seriously. But the work’s not done yet. One of the steps you’ll need to do in the incorporating process is to appoint a Board of Directors.
By law, your corporation must have a Board of Directors to represent it and to make decisions on behalf of shareholders. The number of members required will vary from state to state. For example, if you incorporate in California, you’re required to have at least one Board member.
Having more can be advantageous, as it’s your Board of Directors that will help you make decisions about your company. Together, you can determine your business’ path for:
- Strategic growth
- Issuing shares
- Raising prices
- Adding new products
You’ve got a few options when it comes to who you’ll invite to join your Board of Directors. You can choose from among your employees if you think they’re a good fit for making high-level executive decisions.
If you don’t have people who fit the bill on your team, look elsewhere. Some ideas for potential Board members:
- Former employees
- Mentors
- Past clients
- Networking contacts
- Friends
Essentially, you want a Board of Directors that is well-versed in areas you are not as adept in. This keeps the Board well-rounded and capable of making balanced decisions. Imagine a Board entirely made up of accountants. The decisions would be much different than one with people of varying skills!
But what if you’re a one-man or woman show? Who should your Board consist of? Technically, you only need one person on your Board of Directors to incorporate, so you can serve as the Board, or you can look in your network to find people to help you make the decisions.
You will need to disclose your Board members in your corporation paperwork, and you’ll also be required to hold annual Board meetings to keep compliant as a corporation. At each meeting, you’ll need to take minutes and submit those with your corporation paperwork each year.
Selecting your Board of Directors is just one of the steps toward your future as a corporation!
