Establishing your business as a corporation is often preferred by companies who are seeking external investment or plan to take the company 'public'.
This comes with greater formalities such as requiring a Board of Directors, issuing stock and creating bylaws; however, it also comes with numerous advantages:
Limit Your Liability - Separate your personal affairs from your business so that your personal assets are protected. When doing business as a corporation, the company may go bankrupt and the shareholders may lose their initial investment, but the creditors cannot touch the personal assets of the owners.
Raise Capital - A corporation may raise capital by selling stock or borrowing money. A corporation does not pay taxes on money it raises by the sale of stock.
Maintain Control - By distributing stock, the owner of a business can share the profits of a business without giving up control.
Tax Advantages - There are several tax advantages that are available only to corporations. Medical insurance for families may be fully deductible, tax-deferred trust can be set up for a retirement plan, and losses are fully deductible for a corporation.