Forming a corporation : Advantages and disadvantages

2007-03-08 10:33:40

( Business )



Your journey to financial freedom has to start from somewhere. If you think you have sufficient experience and enough capital, forming a corporation can be that first step.

Forming a corporation is a step-by-step endeavor. Having adequate capital is not the only consideration in starting your own business. It is important to determine first what kind of business you are setting up and how much capital you are willing to risk.

Advantages of forming a corporation

Setting up a corporation with your friends offers each one of you limited liability. Limited liability protects you from any kind of personal liability or loss should your company encounter problems in the future.

Corporations have easier access to funds. Additional resources can be obtained by stock issuance or capital infusion by existing members.

Corporation enjoys a higher degree of independence. Members can come and go and business will still go on.

Corporation has a high level of transferability.

Disadvantages of forming a corporation

First and foremost disadvantage of a corporation is taxation. Owners of the corporation will be taxed separately, aside from the regular corporate tax you will pay.

A corporation is run by a group of individuals with diverse set of mind and expertise. Decisions regarding the business may take more time to administer since it will go through a lot of red tape and bureaucracy. Arguments too can run high when resolving certain issues.

Corporations usually have wide-ranging operations that may require more capital to operate effectively. Management though centralized may experience glitches in its operation.

Company formation can be difficult to start at first. Paperwork and various state requirements can take most of your time. There are online company formation sites in the internet that can help you set-up your company today. A company formation agent is on stand-by ready to assist you in forming a corporation.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.