If a shareholder dies or sells his or her interest, the corporation continues to exist. Disadvantages of a corporation Corporations are difficult to set up. You must file a number of documents to start a corporation. Corporations are more expensive to form than other types of businesses. There are formalities that you must observe even after the business is started, such as holding annual meetings.
Corporations are the most difficult and expensive form of business to set up.
Unlike partnerships or sole proprietorships, the formation of a corporation is regulated by the state. Though not required by the state, it is generally a good idea to draft bylaws that govern internal corporate policies and procedures. If you are issuing shares, you will need to create a shareholders' agreement. In addition, you must hold annual board of directors' and shareholders' meetings and file an annual report with the state. The cost of setting up a corporation depends on the number of shares and the state in which you are setting up the corporation.