Reference no: EM131658638

Hypothetical: In 2017 there is suddenly a health craze and more and more people are seeking vitamins and/or other health foods to stay fit and healthy. You and your best friend (Julie) decide to take advantage of an opportunity. You both have about $5,000 apiece saved up that you each want to invest to get a business started. You and Julie decide to start an on-line business selling vitamins and health drinks. You both want equal control of the company, and will invest all your funds equally. You both know that these types of businesses lose money in the first year. BUT - you also know that after the first year profits will be generated, as long as you can attract more money ($$$) from new investors to keep up with your inventory requirements (vitamins and health drinks that you buy wholesale). You agree that when you decide to seek additional funds, you will bring in new business partners but you don't want them to gain control of the company you started together. Also, 2 additional facts:

(i) Julie informed you that she may have only another year or 2 (at most) to live due to a terminal illness. She especially wants to get this business going so that it can help provide financially for her daughter and son when she is no longer around to do so, and

(ii) You are currently employed full time in a real estate firm where you make pretty good money. You will make a good salary in this real estate job in the first year when your on-line business is started. But after the first year of the on-line business you want to quit the real estate gig and go full-time with the on-line business to continue to help it grow and prosper.

Question:

What type of business entity would you and Julie decide to form initially, and what factors might lead you to that decision?