What are the advantages and disadvantages of company?
Advantages
•Limited liability for shareholders
•Taxation rate is lower than personal tax rate in the top bracket
•Business expansion is easier due to legal structure
•Fund raising is easier through public share offerings
Disadvantages
•Time consuming and expensive to set up
•Compliance with company rules and legal requirements is a must
•Taxation is based on first dollar of profit
•Separation of ownership and control — meaning there will be principal and agency conflicts where principals (owners of firm) would like to have higher return per risk, agency (directors) are only concerned about returns since risk is borne by the owners.