Corporations are a form of business ownership with their own set of pros and cons. They come with several key benefits as well as drawbacks that need careful consideration.
Advantages of Corporations
- Limited liability
- Easy transfer of ownership
- Business continuity
- Access to capital
- Tax benefits
Disadvantages of Corporations
The downsides to incorporating a business are significant and can affect the decision on whether to incorporate:
- Expensive set up
- More taxes
- Legal formalities
- Double taxation
Key Takeaways
Overall, while corporations offer the essential advantage of limited liability and various other benefits, they also come with the need for substantial upfront investments, compliance with rigorous procedures, and potential for higher taxation.
One primary disadvantage of a corporation is:
- Double taxation: Taxes at corporate level and on dividends at personal level.