1. Maya graduated with a degree in chemistry a few years ago, and returned from college to help run the familys 500 acre vegetable farm. (The family farm operates as an S corporation owned by Maya, her brother and her parents). Maya always had an interest in fertilizers, and she experimented with several blends until she formulated a new fertilizer that yields greater growth at a reduced cost. Maya now intends to commercialize the new fertilizer (called the Farmers Bounty) by starting a new business to manufacture and sell the product.

Maya prepared a business plan, along with certain financial analyses for her new venture. She determined that she will need approximately $250,000 to acquire the necessary equipment and initial raw materials, and cover early operational expenses. Her family is willing to invest $50,000 and give her use of a barn for the manufacturing operations. They have not yet decided whether the $50,000 investment will come from the family S corporation or the individual family members.

Maya also approached a number of wealthy family friends to raise the balance of the needed funding. One gentleman, Dr. Feld (a local surgeon), agreed to invest $200,000 in return for an ownership stake in the new venture.

1. Maya will need to determine the appropriate entity to operate her new venture before accepting investments from her family and Dr. Feld.

1. What types of entities are available to operate a business?

2. Are there any types that would not be available for Maya in this case? If so, why?

2. A number of factors go into the choice of entity decision.

1. Identify and describe the five (5) most important factors Maya should consider in deciding which is the preferred entity to manufacture and sell Farmers Bounty with her investors.

2. Which type of entity should Maya use to manufacture and sell Farmers Bounty with her investors? Compare and contrast your preferred type of entity with the other types. Stated another way, explain why you chose the specific entity and why it is preferable over each of the other types of entities. (In so doing, consider not only the type of business involved but also the interests of each of the investors).