Questions and Answers > Business Entity > What are the disadvantages of a corporation?
What are the disadvantages of a corporation?
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Of the major forms of business, “C” and “S” corporations are the only forms to have the burdensome requirements commonly known as “corporate formalities”. After filing its organizational documents, a corporation must also adopt bylaws, elect a board of directors, hold initial organizational meetings (and thereafter, at least annual meetings), and keep written minutes thereof signed by the appropriate directors and shareholders. Corporations must file an annual report and pay annual filing fees to the state(s) where it does business. If the annual report is not filed timely, the appropriate state agency assesses penalties and will eventually revoke the charter (the right to do business) of a corporation that does not file its annual report.
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