Corporate Support: The cons of business incorporation

Corporate Incorporation: Essential Steps and More

Small business owners can choose from a range of options when deciding on the legal framework. Setting up as a corporation is one choice. Although there are many benefits to incorporating your business, there are a few drawbacks you should be aware of as well. We consulted with legal professionals to break down the many types of companies and the advantages and disadvantages of incorporation to assist you in deciding whether a corporation is the ideal legal structure for your business.

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).

Double taxation:

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.

Ongoing fees:

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.

More record keeping:

Limited liability companies (LLCs), general partnerships, and sole proprietorships are exempt from the initial and yearly record-keeping obligations that corporations must adhere to.

Every aspect of any business comes packed with both advantages and disadvantages that should not forbid you or make you hesitant to proceed with incorporating your business. We at Kaizen offer you the whole spectrum of this service, handling every detail until your business is fully ready to launch into the market with your resources focused on your growth.