John and Jay are fellow graduates in counseling psychology at Yorkville University. After having worked on various projects together during their time at YU, they discovered they actually lived in the same community, met one another, and soon found they enjoyed each other's company and found synergies in their work habits. They now plan on renting some space and opening a clinic together on the cool side of town. John's parents have agreed to provide a five-year interest free loan of $20,000 to assist with start-up costs. Jay's dad, a carpenter by trade, has agreed to help with renovating the shop.

1. What is the ideal business structure for John and Jay?
2. What are their obligations and rights based on their type of liability?