Close Corporation and Small Business Forms - Close Corporation

Benefits of a Close Corporation Closed Corporation

A close corporation is a privately held corporate entity incorporated by a small number of shareholders. Generally, in a close corporation, shareholders or members will be family members or close associates.

The articles of incorporation of a close corporation provide that shareholders of the corporation do not trade or offer corporation shares (stock) to the public. However, the corporation's stock or shares can be owned, offered, exchanged or traded privately. Close corporations are governed by state statutes. State statutes authorize a close or private corporation to function more informally than other types of corporations. Some states have adopted special statutes for close corporations. Close corporations may function even without directors and decisions can be made without official meetings of the board of directors.

Many small businesses prefer to incorporate their business as close corporations. Partnerships with few partners who possess complete control of the firm and family businesses with a limited number of people can be incorporated as close corporations. There are several benefits in incorporating or forming a closed corporation. A close corporation is beneficial to the share holders of a small corporation who want to guard themselves from legal responsibilities and other liabilities of the corporation. Overall, operation of a close corporation will be much simpler since the decision making will be in the hands of a small number of shareholders.

A close corporation can be formed as an S Corp or as a shelf company. It can be formed as a Subchapter S corporation or S Corp if the closely held corporation conforms to the directives provided in subchapter S of the U.S. Internal Revenue Code. A shelf company or a shelf CC is an already registered corporation with no assets or liabilities. They appear to the outside public as not having conducted any business. They are often incorporated for the exclusive intention of being re-sold.

Professionally drafted forms for all the needs of a close corporations can be found on the US Legal Forms Website. The website contains basic information concerning a close corporation, including what is a CC company and details of documents to be filed with the appropriate state agency in compliance with CC registration.