Choosing an Organizational Form

Mark and Krishma met in art school and would like to open a gallery together to sell their artwork. However, they want to create a space that is like a community center so they are able to get their art in front of a broader audience. For instance, there will be rooms that can be rented by fitness instructors to host classes. There will be other space available for art classes, and they plan to include a culinary component. They will also include a room that is suitable for meetings such as book clubs. Their artwork will be displayed throughout the rooms and available for sale. Krishma and Mark are already in the process of writing a business plan and looking at spaces suitable for their vision. They've decided they will forgo creating a corporation at this time because they are unsure if they will find suitable space.

Question 1. What, if any, organizational structure exists between Mark and Krishma at this point?

After looking at spaces for a few weeks, Mark and Krishma found the perfect building in their price range. Before renting it, they would like to formalize the business and select an organizational structure that best suits their needs. They have lined up three investors who will not participate in the management of the organization. Mark and Krishma will manage the organization, and they want to avoid the double taxation that occurs with corporations.

Question 2. What organizational form do you recommend to them? Why?

Krishma and Mark are worried about their personal liability in relation to the organization.

Question 3. What organizational form or forms would help them alleviate these concerns? Why is this the best option? Are there any drawbacks to this option?