Self Help

The corporate structure is more complex and expensive than most other business structures. A corporation is an independent legal entity, separate from its owners and it requires complying with more regulations and tax requirements.

The biggest benefit for a small business owner who decides to incorporate is liability protection he or she receives. A corporation’s debt is not considered that of its owners, so if you organize your risk, a corporation can retain some of its profits, without the owner paying tax.

Another plus is the ability of a corporation to raise money. A corporation can sell stock, either common or preferred, to raise funds. Corporations also continue indefinitely, even if one of the share-holders dies, sells the shares, or becomes disabled.

The corporate structure, however, comes with a number of downsides as well. A major one is higher costs. Corporations are formed under the laws of each state with its own set of regulations. You’ll probably need the assistance of an attorney to guide you. In addition, because a corporation must follow more complex rules and regulations than a partnership or sole proprietorship, it requires more accounting and tax preparation services.