《财务管理》（英文版） 6.ppt

Chapter 2 The Business, Tax, and Financial Environments The Business, Tax, and Financial Environments The Business Environment The Tax Environment The Financial Environment The Business Environment Sole Proprietorships Partnerships (general and limited) Corporations Limited liability companies The Business Environment Oldest form of business organization. Business income is accounted for on the owner’s personal income tax form. Summary for Sole Proprietorship Advantages Simplicity Low setup cost Quick setup Single tax filing on individual form Disadvantages Unlimited liability Hard to raise additional capital Transfer of ownership difficulties The Business Environment Business income is accounted for on each partner’s personal income tax form. Types of Partnerships Limited Partnership -- Limited partners have liability limited to their capital contribution (investors only). At least one general partner is required and all general partners have unlimited liability. Summary for Partnership Advantages Can be simple Low setup cost, higher than sole proprietorship Relatively quick setup Limited liability for limited partners Disadvantages Unlimited liability for the general partner Difficult to raise additional capital, but easier than sole proprietorship Transfer of ownership difficulties The Business Environment An artificial entity that can own assets and incur liabilities. Business income is accounted for on the income tax form of the corporation. Summary for Corporation Advantages Limited liability Easy transfer of ownership Unlimited life Easier to raise large quantities of capital Disadvantages Double taxation More difficult to establish More expensive to set up and maintain The Business Environment Business income is accounted for on each “member’s” individual income tax form. Limited Liability Company (LLC) Limited liability Centralized management Unlimited life Transfer of ownership without other owners’ prior consent Summary for LLC Advantages Limited li