Disadvantages of Incorporating
Learn the disadvantages of incorporating your business
Among the disadvantages of incorporating are:
Your cost of doing business usually increases due to added fees you have to pay.
The amount of paperwork you have to do increases because of legal record-keeping requirements.
You may be subject to "double" taxation, having your profits taxed once at the corporate level and once again as an individual.
The IRS could limit your salary as an employee of your own corporation to an amount it considers reasonable and treat amounts above the "reasonable" salary to be dividends.
Your personal finances must be kept completely separate from the corporations finances. Thus, you can't dip into the corporate bank account if you come up a little short on personal cash for the week.
Closing the corporation's doors permanently can be somewhat complicated and costly.
Incorporate your business the easy way:
Copyright 1993, 2000, 2004 by Janet Attard. All rights reserved.
About the author:
Janet Attard is the founder of the award-winning Business Know-How small business web site and information resource. Janet is also the author of The Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets. Follow Janet on Twitter at http://www.twitter.com/JanetAttard.