Advantages

• There are five commonly-referenced advantages to the corporate form: limited liability for the business owner; ability to raise money by issuing stock; ownership can be easily transferred; taxation of profits at the corporate tax level; and a well established business structure that makes it easier to build business relationships and obtain credit.
  
  

Disadvantages

• Incorporation is often most suitable for a business that expects to have multiple employees or to reach a size that would justify the additional time and expense needed to set-up and run a corporation. A corporation is a more complex business entity than other available formats and has administrative costs, legal and tax requirements and additional filing obligations on the state and federal level that are not applicable to other entity types.
  
  

Significance

• The benefit of limited liability cannot be overstated, and in itself often outweighs any other disadvantage to running a corporation. However, there is now another business entity format that offers limited liability--the LLC or limited liability company--that offers the most significant benefits of incorporating without many of the administrative disadvantages.