BUSINESS LAW

Question: Huma and Zuma want to start Spring High, a business that would take high school students on safe, educational trips during spring break. Eventually, they hope to seek venture capital money and expand the business nationally. After reading up on the legal issues online, Huma thinks Spring High should be a close corporation, while Zuma proposes that it be a S corporation. Neither thinks they should choose an LLC. Who is right? Strategy; At the moment, they could qualify as a close corporation because they only have two shareholders. As long as neither of them is a nonresident alien, Spring High could also be an S corporation. Although Spring High could be an LLC, it is not a form favored by venture capitalists. (See the "Result" at the end of this Case Questions section.)