Disadvantages of Corporations:
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Difficulty of termination
- Once a corporation has started, it's hard to end.
Extensive paperwork
A corporation must keep detailed financial records, the minutes or meetings and much more.
Two tax returns
An individual who incorporates must file both a corporate tax return and an individual tax return.
Size
Large corporations sometimes become too inflexible and tied down.
Possible conflict with stockholders and board of directors
Conflict may occur if the stockholders elect a board of directors who disagree with management.
Double taxation
Corporate income is taxed twice
Initial cost
Incorporations may cost thousands of dollars and require expensive lawyers and accountants.