With recent experiments investigating the optical properties of progressively smaller plasmonic particles, quantum effects become increasingly more relevant, requiring a microscopic description. Using the density matrix formalism we analyze the photoexcited few-electron dynamics of a small plasmonic nanosphere. Following the standard derivation of the bulk plasmon we particularly aim at elucidating the role of the Coulomb interaction. Calculating the dielectric susceptibility spectrum in the linear optical response we find discrete resonances resulting from a collective response mediated by the Coulomb interaction between the electrons. In the nonlinear regime, the occupations of the system exhibit oscillations between the interacting eigenstates. Our approach provides an ideal platform to study and explain nonlinear and quantum plasmonics, revealing that the photoexcited dynamics of plasmonic nanospheres has similarities with and combines characteristics of both the well-known two-level Rabi dynamics and the collective many-electron behavior typical of plasmons.