Disadvantages of a Corporation
Allan Madan, CPA, CA
While corporations have many benefits, there are also some drawbacks. Generally, losses incurred by your business can be offset by personal income. If you’re incorporated then these losses cannot offset.
You are probably wondering what are the disadvantages of having a corporation? There can be a real tax cost to having a corporation. If your business incurs losses, those losses can be offset against personal income but if you’re incorporated, the losses are trapped. Here’s the tip, save taxes in the startup years where you have losses by using the sole proprietorship or partnership structure. Using this tip will save you a substantial amount in the long run.
Ultimately, depending on your specific situation and whether it fits your business needs, you will need to decide if incorporating is the right option for you.
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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