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Chapter 1
Four Type of Business organizational form
Partnership
Corporations
Limited Liability company
Sole proprietorship
Sole proprietorship
The business owns and responsible by the single person and individual. Usually raise money by investing by own funds or by loan (borrowing from bank)

Advantages:
Easy to form.
Tax at the owner tax rate
Totally own decision
Full profit earns not share.
Disadvantages:
Personally, liable for business debts
Limited to access external sources of knowledge, resources, and funds.
Owner deaths mean business ceases.

Partnership
Association of two of more owners came together to operate the business for profit.

Advantages:
Easier for starting.
Tax at the personal tax rate
Multiple sources of funds (with partners)
Multiple sources of resources and technology
Disadvantages:
Multiple people share unlimited liability.
Not easy to transfer ownership.
Profit sharing
Asset sharing
Type of partnerships
Partnership can be dividing into:

General
Runs business together and take unlimited liability for company’s debt.

Limited
Only liable for the amount of investment by the limited partner.

Corporations
Corporation are separating itself from the shareholder or owner, and corporation consider itself as a legal entity which can sue and to be sued. All the profit and assets also consider at corporation’s own income.

Corporations can also be dividing into few types which is:
C-corporation
S-corporation
Close corporation
Professional corporation

Advantages:
Limited liability to debts or loss based on owner’s investment.
Profit and loss are belonging to the company its own.
Easier to raise funds.
Fair and easy transferring
No limitation on investment
Unlimited amount of owner
Disadvantages:
Highly cost at starting (establishing)
Complex procedure and paperwork
Double taxation (when company get profit when shareholder get dividend)
Highly cost at operation
Share could only be transfer but not withdrawal.
Complex regulation and procedure

Limited liability Company (LLC)
Was similar with limited partnership, but combine the advantages of partnerships (tax benefit) and corporations (limited liability)

Advantages:
Limited liability for owner
Profit sharing without double taxation.
Flexible tax
Higher Assets and owner protection
No limitation on owner
Disadvantages:
Complex agreements
Higher staring cost
More restriction because of regulation
SOX Act 2002
Sarbanes-Oxley Act
Sox act was passed in the year of 2002 by U.S. legislation because of the case of company’s financial fraud issues such as Enron company. One of the main purposes of SEX act 2002 is to increase the reliable and accuracy of the information disclosing.
5 common principle of Financial management
Principle 1: money has a time value.

Principle 2: There is Risk-return trade.

Principle 3: Cash Flows Are the Source of Value

Principle 4: Market prices reflect information.

Principle 5: Individuals respond to incentives.

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Chapter 1
Four Type of Business organizational form	Partnership Corporations Limited Liability company Sole proprietorship
Sole proprietorship	The business owns and responsible by the single person and individual. Usually raise money by investing by own funds or by loan (borrowing from bank) Advantages: Easy to form. Tax at the owner tax rate Totally own decision Full profit earns not share. Disadvantages: Personally, liable for business debts Limited to access external sources of knowledge, resources, and funds. Owner deaths mean business ceases.
Partnership	Association of two of more owners came together to operate the business for profit. Advantages: Easier for starting. Tax at the personal tax rate Multiple sources of funds (with partners) Multiple sources of resources and technology Disadvantages: Multiple people share unlimited liability. Not easy to transfer ownership. Profit sharing Asset sharing
Type of partnerships	Partnership can be dividing into: General Runs business together and take unlimited liability for company’s debt. Limited Only liable for the amount of investment by the limited partner.
Corporations	Corporation are separating itself from the shareholder or owner, and corporation consider itself as a legal entity which can sue and to be sued. All the profit and assets also consider at corporation’s own income. Corporations can also be dividing into few types which is: C-corporation S-corporation Close corporation Professional corporation Advantages: Limited liability to debts or loss based on owner’s investment. Profit and loss are belonging to the company its own. Easier to raise funds. Fair and easy transferring No limitation on investment Unlimited amount of owner Disadvantages: Highly cost at starting (establishing) Complex procedure and paperwork Double taxation (when company get profit when shareholder get dividend) Highly cost at operation Share could only be transfer but not withdrawal. Complex regulation and procedure
Limited liability Company (LLC)	Was similar with limited partnership, but combine the advantages of partnerships (tax benefit) and corporations (limited liability) Advantages: Limited liability for owner Profit sharing without double taxation. Flexible tax Higher Assets and owner protection No limitation on owner Disadvantages: Complex agreements Higher staring cost More restriction because of regulation
SOX Act 2002 Sarbanes-Oxley Act	Sox act was passed in the year of 2002 by U.S. legislation because of the case of company’s financial fraud issues such as Enron company. One of the main purposes of SEX act 2002 is to increase the reliable and accuracy of the information disclosing.
5 common principle of Financial management	Principle 1: money has a time value. Principle 2: There is Risk-return trade. Principle 3: Cash Flows Are the Source of Value Principle 4: Market prices reflect information. Principle 5: Individuals respond to incentives.