Examples of S-Corporation Bylaws

by Adele Burney; Reviewed by Michelle Seidel, B.Sc., LL.B., MBA; Updated April 09, 2019
By-laws provide guidance in electing a board of directors

By-laws provide guidance in electing a board of directors

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Incorporating your company as a business entity like an S-Corporation involves completing an application and submitting it to a state agency along with the company’s articles of incorporation as well as having the S-corporation bylaws which govern how the corporation will be run. Many individuals and small businesses choose to form an S-Corporation because this type of corporation allows the shareholders to report the company’s income and losses on their personal returns, thus avoiding a duplicate tax on corporate income.

Importance of By-Laws

Many small business owners may question the importance of creating by-laws, especially if they do not have multiple shareholders. By-laws are important, because they are an additional step in establishing the business entity as a corporation. One reason is that some owners may discover that banks and other institutions require a copy of the company by-laws before doing business.

Another reason is that by-laws establish guidelines by which the company will be governed. Establishing the guidelines upfront will help to avoid future conflicts. In addition, even though a company is small today, there is always the potential for growth and the by-laws can help provide a roadmap for that success.

Examples of S-Corporation By-Laws

Some examples of S-Corporation By-Laws which may appear on a company’s records are: Annual meetings are to be held for the purpose of electing a governing board of directors for the upcoming year. A quorum of six directors is needed in order to proceed with voting or other transactional business. The corporate officers shall consist of a president, chief financial officer, vice president and chief executive officer. If an officer of the corporation is found to be derelict in their duties they may be removed by a shareholder majority vote.

What to Include

By-laws should include guidelines for the corporation such as committee formation, election of directors and board member responsibilities. The by-laws may or may not include the location and frequency of board meetings. The by-laws can contain guidelines for reporting to shareholders and the rights of the shareholders. The by-laws can provide the rules by which officers are elected and removed.

They can also contain information regarding the compensation of officers. The by-laws lay out the terms of stock offerings and determine if the stock will be certified or not. The by-laws should also provide details on how existing by-laws may be edited or repealed or how new laws will be adopted.

Possible Information Resources

If you are having trouble getting started on the creation of by-laws, there are a number of sites which offer sample templates. You can find sample downloadable by-laws that can be updated with your state information. Consulting with a lawyer can help you avoid any missteps in creating by-laws. You may also wish to consult a CPA on creating S-Corporation by-laws.

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