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Advantages and disadvantages of owning unincorporated and incorporated businesses

What is an incorporated business

Disadvantages of owning incorporated businesses

Disadvantages of an unincorporated Business

  • Must give certain financial information about the business to general public if requested
  • Must keep things such as accounting records which costs money
  • Less control over business
  • Must pay corporation tax and income tax on profits (often referred to as double taxation.
  • Owners liable for all of the businesses debts
  • Owners are tied to legal action taken by or against business.
  • Businesses in it's present state closes upon death of one of the owners

An incorporated business (sometimes called a corporation) is a business which is owned by many individuals and is usually listed on the stock exchange. An incorporated business is considered its own legal entity.

Advantages of owning incorporated business

Advantages of owning an unincorporated business

  • Financial information remains private to the owners of the business
  • Simpler to operate
  • Each owner has more control over the business.
  • Business only pays income tax on profits.
  • Limited liability(the owners of the businesses are not liable for the businesses debts)
  • Separate legal entity(owners not tied legal actions taken by or against the company)
  • May be given government incentives
  • Business can raise finance through selling shares.
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