Disadvantages of Corporation

The administration costs are more expensive with a corporation than with a partnership or a
sole proprietorship. Administration costs include incorporation costs, annual financial
statements and annual corporate income tax return. Losses in an incorporated business
can't be personally claimed.

1.Double taxation
Depending on the type of corporation, it may pay taxes on its income, after which
shareholders pay taxes on any dividends received, so income can be taxed twice.

Corporations pay taxes on profits when corporate income is distributed to owners

(shareholders) in the form of dividends. This is the first taxation. The shareholders who
receive dividends must also pay taxes for this distribution on their personal returns. This is
the second taxation of the same money.

2.Paperwork
Depending on the kind of corporation, the various types of income and other taxes that
must be paid can require a substantial amount of paperwork. Paperwork for a corporation
is intense. Annual reports and corporate tax returns are required for the government. Other
paperwork required are accounting records, shareholder meeting minutes, board of directors
minutes and licenses.

3.Management
In this form of business, you cannot own a corporation. This means a board of directors
will be making the decisions. The board of directors could potentially remove you from
company. The management team could ignore owner oversight if no one has a majority
interest in the company.

Bragg, S. (2018, December 29). Corporation advantages and disadvantages. Retrieved

from https://www.accountingtools.com/articles/corporation-advantages-and-
disadvantages.html

The Insurance Advice. (n.d.). Advantages and disadvantages of a corporation. Retrieved

from https://theinsuranceadvice.com/corporation-advantages-disadvantages/

Wolfe, L. (2018, December 24). The disadvantages of forming a corporation. Retrieved from
https://www.thebalancecareers.com/disadvantages-of-forming-a-corporation-3514957

UpCounsel. (n.d.). Disadvantages of corporations: Everything you need to know. Retrieved

from https://www.upcounsel.com/disadvantages-of-corporations