Question 1: Type of Organization
Introduction
Ever since graduating from Harvard Business School's MBA program, Sarah Jones has dreamed of owning and operating her own technology consulting company. Sarah is currently working as a consultant at a tech firm, but is confident she could start her own. Sarah has started to research the surrounding area to decide how to structure her business. Sarah's goal is to build a prestigious business and earn income from selling a number of services to customers in Boston: Annual technology consulting services with unlimited support to clients throughout the year. Pay-Per-Project (where a fee would be charged for each project completed for clients who do not hold an annual membership) Sales of Goods (such as software, hardware, and other tech accessories) Sarah anticipates the need to raise approximately $500,000 in money to start her company. Sarah is willing to invest $150,000 of her own personal money which means the remaining funds must come from outside sources.
Sarahs Personal Life
Sarah has not approached any of her friends to see if they would be interested in participating in this exciting business venture. As a result, Sarah is unaware of how much money each friend could contribute (if interested) or how much participation they would want in managing her technology consulting company. Her best friend did graduate from Harvard Business School at the same time as her and might be interested in pursuing the venture collaboratively. Sarah currently lives in a townhouse. The townhouse was purchased three years ago for $600,000 using the cash proceeds Sarah received from selling her previous company. As such, Sarahs personal residence has been paid in full and no money is owing on it. Sarah has a very good credit score and always pays her bills on time (including her credit cards). Sarah loves her personal residence and under no circumstances would Sarah consider selling her property as a means of raising money.
Required:
Sarah has the following questions
1. What type of business organizations are available for me and what tax implications should I be aware of as I establish my business?
Business Organization	How is it taxed?
2. All organizations need to prepare financial statements. Who would be the main users of my financial statements in the first year of operations? What types of decisions would the financial statement users be making?
Users	Decisions
3. What options are available to me for raising the additional $500,000 I need to start my business, and how can I ensure that I make the most strategic and financially sound decisions when it comes to financing my business?
Ways to raise $500,000	Advantages	Disadvantages