武汉理工大学：《财务管理》课程PPT教学课件（英文版）Chapter 2 The Business, Tax, and Financial Environments

Chapter 2 The Business tax and financial Environments 2-1

2-1 Chapter 2 The Business, Tax, and Financial Environments

The business, Tax, and Financial Environments The Business environment The tax Environment The financial Environment 2-2

2-2 The Business, Tax, and Financial Environments The Business Environment The Tax Environment The Financial Environment

The Business Environment The u.s. has four basic forms of business organization Sole Proprietorships Partnerships general and limited) Corporations Limited liability companies 2-3

2-3 The Business Environment Sole Proprietorships Partnerships (general and limited) Corporations Limited liability companies The U.S. has four basic forms of business organization:

The Business Environment Sole Proprietorship .a business form for which there is one owner This single owner has unlimited liability for all debts of the firm Oldest form of business organization n Business income is accounted for on your personal income tax form 2-4

2-4 The Business Environment Oldest form of business organization. Business income is accounted for on your personal income tax form. Sole Proprietorship -- A business form for which there is one owner. This single owner has unlimited liability for all debts of the firm

Summary for Sole Proprietorship Advantages Disadvantages Simplicity Unlimited liabil Low setup cost Hard to raise Quick setup additional capital Single tax filing Transfer of on individual form ownership difficulties 2-5

2-5 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 Partnership -a business form in which two or more individuals act as owners n Business income is accounted for on each partner's personal income tax form 2-6

2-6 The Business Environment Business income is accounted for on each partner’s personal income tax form. Partnership -- A business form in which two or more individuals act as owners

Types of Partnerships General Partnership -all partners have unlimited liability and are liable for all obligations of the partnership 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 2-7

2-7 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. General Partnership -- all partners have unlimited liability and are liable for all obligations of the partnership

Summary for Partnership Advantages Disadvantages Can be simple Unlimited liability for Low setup cost, higher the general partner than sole Difficult to raise proprietorship additional capital, but Relatively quick setup easier than sole proprietorship Limited liability for limited partners Transfer of ownership difficulties 2-8

2-8 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 Corporation -a business form legally separate from its owners An artificial entity that can own assets and incur liabilities n Business income is accounted for on the income tax form of the corporation. 2-9

2-9 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. Corporation -- A business form legally separate from its owners

Summary for Corporation Advantages Disadvantages Limited liability Double taxation Easy transfer of More difficult to ownershi establish Unlimited life More expensive Easier to raise large to set up and quantities of capital maintain 2-10

2-10 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