What form of business should I start?

My friend and I are starting an online business to sell environmentally friendly diapers.

We are both middle aged women. She has kids, I don't and our husbands work for the city. We have some assets in the houses and a little cash. We did a business plan and only expect to generate 20k in revenue the first year and maybe $60k by year 5. Our expenses first year should be about $13k.

What form of business would be best for us? Obviously corporation is not reasonable!!

Limited Liability Company (LLC) partnership seems to make the most sense to me. You can split this 50-50, or if one owner is investing more startup capital or some other tangible property you can do any other split you want.

A nice thing about this approach is you can use a different model for paying yourselves. So if you are split 50-50, but one month one partner cannot work, or the other partner just works significant overtime for a big job, you don't need to pay each other 50-50. The ownership percentage though determines how much of the year to year profit each partner is entitled to.

So LLC gives you some flexibility but also provides the protections you need. Corporations (C-Corp or S-Corp) can provide some benefits down the road, but while you're getting started I say stick to LLC.