| Recently, I wrote about the advantages of taking a | | | | 3. When you take your company public, you now have |
| company public but as you know, whatsoever has an | | | | to serve three bodies. You will now have to serve |
| advantage has a corresponding disadvantage. Though | | | | your customers, government agencies or regulatory |
| you might call them disadvantages, I prefer to call them | | | | and the investors. This might be too cumbersome or |
| challenges. | | | | stressful for some entrepreneurs to handle. |
| I hope you know that forming a public corporation is | | | | 4. Public Corporations are subjected to more legal |
| the same as taking a company public. | | | | restrictions than other type of entities. |
| Below are 7 reasons why most entrepreneurs shy | | | | 5. When you take a company public, your company |
| away from forming a public corporation or taking their | | | | becomes subjected to stiff accounting rules and |
| company public. | | | | principles. |
| 1. The management structure in a public corporation is | | | | 6. When you form a public corporation, your business |
| usually decentralized so therefore the managers are in | | | | affairs and financial statements can't be kept secret |
| most cases not the business owners. Since they are | | | | any longer. It must be published to the public at large. |
| managers, they may not be motivated towards the | | | | 7. Public corporations are subjected to heavy |
| company's goal and vision as the entrepreneur that | | | | corporate tax. They pay both federal and state tax. |
| created the business. | | | | Public corporations are also subjected to double |
| While the entrepreneur may be driven by the desire to | | | | taxation. They are taxed based on their earnings and |
| fill a need and build a successful business, the manager | | | | the shareholders are taxed based on their dividend. |
| may be driven by bonus, incentives, job title, promotion | | | | In conclusion, I want you to also know that public |
| and the salary, not the entrepreneur's vision. | | | | corporations face severe penalties if they go wrong or |
| 2. Taking a company public is very expensive due to | | | | mis-inform the public, so professionalism and |
| legal fees, meeting up with the demand of government | | | | transparency are the rules of the game. However, if |
| agencies and regulatory bodies and also the cost of | | | | you are daring, you might decide to take your |
| undertaking an IPO (Initial Public Offer) adds to the | | | | company public. It is all part of the challenges of |
| burden. | | | | entrepreneurship. |