any stockholders that are corporations or nonresident alien investorsa C

Any stockholders that are corporations or nonresident

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any stockholders that are corporations or nonresident alien investors—a C-corporation (form used by public corporations) doesn't face these limits Advantages: all profits earned pass directly to stockholders—no taxes are paid at corporate level Disadvantage of a C-corporation : it must pay taxes on the income it earns and stockholders must pay taxes on dividends they receive—subject to double taxation at corporate and personal level o Can be public or private—public can raise large amounts of capital through public markets at a low cost Public markets : markets regulated by the Securities and Exchange Commission in which securities such as stock and bonds are publicly traded—NYSE, NASDAQ Privately held or closely held corporations : corporations whose stock is not traded in the public markets o Limited Liability Partnerships and Companies (p.9) Limited Liability Partnership (LLP) : came about because of sharp increases in professional malpractice cases—combines some of limited liability characteristics of a corporation with the tax advantage of a partnership— generally have more limited liability than general partners —typically not liable for any other partner’s malpractice— taxed as personal income
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Limited Liability Company (LLC): another hybrid form of organization— provide limited liability to the people who make the business decisions in the firm while enabling all investors to retain the flow through tax advantages of a limited partnership LLPs and LLCs are flexible —can be indefinite or for a set period of time Managing the Financial Function (p.10) CFO: Chief financial officer ; most senior financial manger in a company—concerned with investing, financing and working capital management decisions Organizational Structure o Top position in the firm is the CEO (chief executive officer) (p.11 for table)—CFO reports to CEO Positions Reporting to the CFO o Treasurer : looks after collection and disbursement of cash, investing, raising new capital, foreign exchanges, overseeing the firm’s pension fund managers o Risk manager : monitors and manages firms risk exposure in financial commodity markets o Controller: chief accounting officer—prepares financial statements, maintains firm’s financial and cost accounting systems, works with external auditors o Internal Auditor: identifies and assess major risk facing the firm and performing audits in areas where firm might incur losses —reports to the board of directors and CFO External Auditor : independent auditor that annually audits firm’s financial statements—decides if firm’s financial statements present fairly—creditors and investors require independent audits The Audit Committee : subcommittee of board of directors; oversees the accounting function and the preparation of the firm’s financial statements—conducts investigations of fraud, theft, or malfeasance in firm—reports to audit committee Compliance and Ethics director : publicly traded companies must have a compliance and
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