Cost and Paperwork
Corporations require paperwork, including documents like articles of incorporation and annual reports that must be filed with state agencies. Thus, they can be more expensive to start up than other types of business structures. Depending on state law, corporations generally must keep records of annual meetings, share ownership and other corporate formalities. Compared to other business entities, a corporation's record-keeping can be more of a hassle.
In some cases, corporate earnings are double-taxed, meaning they are taxed at the corporate level when the business earns the income, and then taxed a second time at the individual level when profits are distributed. To avoid this double taxation, businesses can be structured as S corporations, which are smaller corporations that are taxed differently than regular C corporations. In an S corporation, earnings flow through to the tax returns of the individual shareholders rather than being taxed at the corporate level.