A company is not for everyone, and you might find that it ends up costing you more in terms of time and money. The following potential drawbacks should be considered before forming a corporation: There is a drawn-out application process, certain formalities and regulations to adhere to, it can be expensive, and you might be subject to double taxation (depending on your corporation structure).
When corporate profits are dispersed as dividends, C corporations are liable to a double tax. By choosing S corporation tax status with the IRS, this can be avoided.
Articles of incorporation must be filed with the state, together with any associated fees. Continual fees are levied by many states, and corporations are subject to higher rates than sole proprietorships or general partnerships.
Limited liability companies (LLCs), general partnerships, and sole proprietorships are exempt from the initial and yearly record-keeping obligations that corporations must adhere to.