Can you believe that the Holiday season is already here and New Year’s is just around the corner? Before you finalize your strategy and plans for next year let me ask you a simple question.
Have you set up your business structure as a corporation, LLC, or Limited Partnership?
If you answered ‘yes’ did you know that you have a unique opportunity that no other individual or sole proprietor has?
It’s the ability to start a business credit profile that is completely separate from your personal credit profile.
Here are my ‘Top 10 Reasons to Start Building Business Credit in 2010.’
- Any debt you accumulate for the business would only report to your business credit report not your personal credit file.
- Eliminate the co-mingling of funds–and this includes the “co-mingling” of credit profiles so you won’t jeopardize the protection of the corporate veil.
- Protect you and your family from personal liability when you get approved solely on your businesses’ credit file.
- Improve your personal debt to credit limit ratios by transferring the balances of business debt used with your personal credit to your business credit.
- Eliminate personal liability you have on your existing business debt by balance transfer from personal credit to your business credit.
- Increase your personal credit limit availability for you and your family.
- Improve the appearance of your businesses’ funding capacity and stability.
- Eliminate inquiries on personal credit when applying for business financing.
- Increase your businesses’ ability to obtain cash credit 10 to 100 times greater than you can obtain personally.
- SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.
Some other benefits include:
- Business credit cards have much higher limits than personal credit cards.
- Having the larger cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
- Prevent the risk of damaging your personal credit
- Prevent the limits that lenders will impose on you for personal credit for you and your family’s needs
- Reduce your tax burden and improve accounting
Still not convinced you need to start building business credit?
Every business will at one point require an influx of cash in order to cover operating expenses, expansion costs, legal fees, inventory or a range of other items the business may require in order to operate. The worst mistake you can make is seeking funding when your business needs it most. Lenders extend cash credit lines to businesses that don’t need the capital. Start digging your well before your business gets thirsty!
Instead of jeopardizing your personal credit and assets every time your company requires financing, you can use your business credit rating to secure the financing you need with even more favorable terms and lower interest rates. Make 2010 your year for building a strong business credit profile!