Closely Held Corporation

Think of a closely held secret. Only a few people know it. Like the fact that you belong to a My Little Pony fan club, or that you once ate an entire frozen pizza at one sitting, without bothering to defrost it.

A closely held corporation works the same way. Only a few people own it. Unlike a typical public company, which might have thousands or even millions of investors buying a few shares on the open market, shares in a closely held corporation are owned by just a handful of people.

The IRS defines a closely held corporation as having more than 50% of the value of the stock owned by five or fewer people.