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Drawbacks of Incorporation


Start-up cost

The underlying start-up costs (i.e., government charges) might be costly when contrasted with the start-up expenses of sole proprietorships and partnerships.

Maintaining of corporate records

A company is required to accurately keep up its corporate records as well as hold meetings, choose executives and furnish shareholders with certain corporate financial data.

Double taxation

Income created by an organization is burdened at both the corporate level and shareholder level. A company must pay taxes on its income and the shareholders must pay taxes on dividends (i.e., profits they get from the company). Be that as it may, quite a bit of this two fold taxation might be limited by balancing the company's operational expense (i.e., salaries) with its income.