Incorporation has the potential to offer tax advantages in addition to limited liability protection. Because corporations are taxed at a different rate than individuals, the business may pay less overall in taxes. Also, organizations can deduct specific costs, for example, health care coverage and retirement commitments, which can diminish available pay.Chapter 3: The Drawbacks of Incorporating While incorporating a company has numerous advantages, there are also potential drawbacks. The complexity and cost of incorporation are two of the main drawbacks. Legal and accounting fees, filing fees, and ongoing compliance requirements all contribute to the lengthy and costly incorporation process.