“An entity (usually a business) having authority under law to act as a single person distinct from the shareholders who own it and having rights to issue stock and exist indefinitely; a group or succession of persons established in accordance with legal rules into a legal or juristic person that has legal personality distinct from the natural persons who make it up, exists indefinitely apart from them, and has the legal powers that its constitution gives it.”
Black’s Law Dictionary Eighth Edition
Corporations are people under the law. Much like children, they are separate from those who created them, but (early on) have a difficult time surviving without them. One of the features of a corporation is that it must be governed by centralized management. That means that the owners (called shareholders) can often be far removed from the business of the corporation because the corporation is managed through a board of directors elected by its shareholders. The board makes the decisions regarding how the corporation is to operate as well as selecting the officers and developing corporate policies. This is easiest to imagine if you picture the companies on the stock market. Your average shareholder (someone who owns stock in a company) is not going to make any decisions in the business. They often give proxy to the board for even the decisions the shareholder should make.
This idea of centralized management is often undermined in a startup as the owners and the board are comprised of the same people. This is one of the most confusing parts of startup life with a corporation. This is especially true for bootstrapped startups. If you are building your business from the ground up with your own money and time, it may be difficult to find someone who is willing to serve on your board.
One way to solve this, if you do not have a full-fledged board, is to set up your corporation so the Board has all of the authority, but the Board is made up of the shareholders. This would be explained in the bylaws of the corporation. This makes your startup’s board have power very similar to the boards of publicly traded companies. You effectively give proxy to yourself as a board member to make all of the decisions you as a shareholder should make. That certainly helps to clean up the record keeping for the corporation!