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Build Corporate Credit for Your Small Business
| Guest post by: Marco Carbajo |
Article Overview: Discover what you will need to build corporate credit for your small business and what will prevent you from getting started...
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Free Download - Building Business Credit is the Path to Your Company's Creditworthiness By Marco Carbajo |
Build Corporate Credit for Your Small Business
One of my friends recently asked me whether or not he can build corporate credit for hissmall business. After asking a few simple questions there was really only one obstacle that was preventing him from starting which was the legal structure of the sole proprietorship that he chose for his company. Unfortunately, this happens to be the most common choice among smallbusinesses. Normally you don't pay anything to start a sole proprietorship. Of course you don't get anything, either.
Unless you count the following as valuable business assets:
* Lots of personal liability
* No protection from your business creditors
* An increased risk of being audited
* Problems with valuation for a subsequent sale of the business
The reason for this lack of protection is because a sole proprietorship is not considered a separate legal structure. Instead, it is considered a personal extension of you and because this business types is considered a personal extension of you, you don't have any protection from it.
In addition, you can't build a business credit file separate from your personal credit file with a sole proprietorship. In order to build corporate credit you will need to first incorporate your business and next obtain an employee identification number (EIN).
This step by far is the most importantbecause it's the foundationfor what you will buildyour corporate credit upon.Not to mention all the other important areas that entity selection affects such as taxes, liability and asset protection.
Once you incorporate your business and have obtained an employee identification number you will then need to complete the standard corporate conformity guidelines that creditors expect your business to complete. There are over twenty specific tasks that I review with my clients prior to setting up their business credit file and applying for vendor credit lines to build their corporate credit.
Now if you're wondering why your business would need to build corporate credit first ask yourself the following questions:
Do I use my personal credit cards to pay for my business expenses?
Do I purchase goods and services from other businesses using my personal credit in order to operate and grow my business?
Do the credit card charges I incur for my business show up on my personal credit reports?
When you build corporate credit you have the unique opportunity to obtain business credit cards with no personal guarantee. Best of all when you use these cards for your small business expenses they don't affect your personal credit reports!
Some other benefits include:
- Business credit cards have much higher limits than personal credit cards.
- You can build corporate credit even if you have bad personal credit
- Reduce your tax burden and improve accounting
And that means you're exposed.
Now is the time to select theproper business structurefor your business if you want to build corporate credit and you want to protect yourself from personal liabilities.
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Article Tags: build corporate credit, building corporate credit, corporate credit
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About the Author: Marco Carbajo RSS for Marco's articles - Visit Marco's website Marco Carbajo is a nationally recognized speaker and expert on business credit and business finance. He is the founder of the Business Credit Insider's Circle, a business credit building company offering step-by-step training, support, resources, and expert insight designed to help small business owners establish business credit separate from personal credit, plus obtain the cash and credit their business needs. Marco has spent 19 years in the business and consumer credit industry, where he has successfully built two multimillion dollar companies in a few short years, achieving over $26 million in sales and serving over 46,000 entrepreneurs, mortgage brokers, real estate professionals, and non-profit organizations. A native of Michigan, Marco is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and the author of "Eight Steps to Ultimate Business Credit" and "How to Build Business Credit with No Personal Guarantee." His articles and blogs have been featured in Business Week, The Washington Post,The Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain. Follow Marco on Twitter @MarcoCarbajo and read more of his insights on establishing business credit at his blog. Click here to visit Marco's website   Raise Credit Scores Raise FICO Score Product Review Build Corporate Credit for Your Small Business Business Credit Builder Unlocks Corporate Credit for Entrepreneurs Establishing Business Credit with a Secured Business Credit Card Building Business Credit is the Path to Your Companys Creditworthiness |
Related Forum Posts
My entry
- 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read
- this is a fascinating book about the history of Business theory, and I'd recommend it to anybody.
2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto.
3. PADI: The Business of Diving Book
Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.
Happy Worker as of Dec 31 2007
- Here's mine... I'm now off to make an offering to the business planning gods for their help in getting to these goals & beyond.
To the combined success of Prophets 2 Profits!
-----------------------------------------
1) Corporate
a) Retail
- Sales reps covering all major markets (1M or more)
- Retail product launch plan
- 1 more retail release (TBD)
b) The Toy Agency
- Systems for:
o Creative process
o Pricing
o Manufacturing
o Logistics
- Marketing agency strategy in place
- 1 new customer every 2nd month (5 new customers); 1 of which will be rev of >= 500K/year
c) Business
- Creative talent pool management strategy & process
- Outsourced and/or weekly bookkeeping
- Monthly budgeting & forecasting
- Better banking organization (Line of Credit, CCs, automate billing for appropriate vendors)
- Team total of 5
- Larger office
d) Web site
- Daily updates
- Start of separation of Blog/TTA/Retail
2) Personal
- Most weekends “off”!
- Entirely separate personal finances; basic personal financing plan
- Family….?
Re: Great start, but no finish
- My advise is FOCUS on your business.
Focusing is the main factor to succeed on business. If you have a great idea, then follow it only, don't look anywhere else. It is especially essential in an online business. Because there are a lot of mind blowing sales letters promising millions dolllars or overnight success, people find it difficult to concentrate on one business and they lose their energy.
Concept is simple.
1- Have a good idea;
2- Build your business on it;
3- Monetize your business;
4- Promote it;
5- Build list of responsive customers;
6- Maintain You Business.
Focusing and not fearing from competition (instead you can learn from competitiors) are main tips of billionaires ,BTW.
Orxan
These maybe the coldest franchises out there:
- Here are the worst 15 performing franchises in regards to having the highest Small Business Administration (SBA) loan failure rates. The list is dotted with sub sandwich shops, fitness centers and car shops.
WORST FRANCHISE LOAN FAILURES Failure %
1 OBEE'S SOUP SALAD SUBS 55.56%
2 LADY OF AMERICA 41.94%
3 COUNTRY CLUTTER (BED & BREAKFAST) 41.18%
4 COPY CLUB 36.36%
5 ALL TUNE AND LUBE 35.71%
6 PICKERMAN'S 35.71%
7 PHILLY CONNECTION 35.59%
8 ROLY POLY ROLLED SANDWICHES 34.78%
9 COTTMAN TRANSMISSION 34.48%
10 HAIR COLOR EXPRESS 33.33%
11 LEE MYLES AUTOMOTIVE TRANSMISSIONS 33.33%
12 GODFATHER'S PIZZA 33.33%
13 SMOOTHIE FACTORY 33.33%
14 BLIMPIE 31.39%
15 GOLF U.S.A. (RETAIL GOLF EQUIP.) 30.77%
Source: Small Business Administration, SBA Loan Performance Within Franchise Code for the Period of FY 2001 - 2005
Exclusive: Interview with Results
- Hi Forum Members,
I'm helping start up a Business Coaching and Consulting company here in Toronto, Ontario, Canada (a Subsidiary of RSC Business in Los Angeles).
As a Research and Development Intern I am required to practice my listening and interview skills by surveying Small and Medium Businesses on thier Business.
This Survey is designed by RSC Business to also assist the Business being interviewed more insight into their own business.
I am looking to interview about 30 businesses across North America over the span of 3 months.
At the end of these interviews I will be publishing a report of the results and they will be made available for free to the Interviewees. The Report data will include responses from a minimum of 100 interviews.
I would like to extend this opportunity to members of the Forum.
If you would like to have this short 20-30 minute interview conducted on your Business and you reside in North America please send me an email or PM.
Please contact me at andy[at]jvprosperity[dot]com to arrange our interview and to get free access to the results when they are published.
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