Cynthia needs your advice regarding which form of business entity to choose for her new business. She expects the new business will have losses of approximately

$80,000 in each of the first two years but anticipates profits that will grow steadily thereafter. Cynthia has no cash to contribute to the business but plans to work 50 or more hours per week managing the day-to-day operations of the new business. Four individuals will contribute $50,000 each to start the business.

To fund growth, Cynthia anticipates that additional funding will be needed in three years. Cynthia wants to meet with you next week to discuss your analysis and preliminary recommendations.

a. Based on this information only, what would you recommend?

b. Before meeting with Cynthia, prepare a list of questions you would like to ask to obtain the additional information you would need to make a more thorough analysis.

AppendixLO1