For the owner, this provides for the continuation of the business in the event of an untimely death. A corporation may also make it easier for the business to raise capital, borrow money and obtain credit. The chief financial drawback of incorporating is double taxation. Stockholders report their share of business profits or losses on their individual tax returns. This form of incorporation is common with small companies.
Corporations are also subject to many state and federal controls.
If you want to expand your business to other states, you may have to pay additional fees. There can also be complications in filing annual tax forms, which require more extensive bookkeeping during the year. Before deciding to incorporate or not to incorporate, meet with your tax attorney. Obtain expert advice as it applies to your business and personal financial situation and goals.