Small Business Credit!

Establishing your small business credit is very important when starting a small business. As a small business owner you want to make sure you have or can obtain the necessary credit you may need when operating a business.

Separate Entity

In order to establish your business credit apart from your personal credit, you may want to set up and operate your business as a separate entity.

Setting your business up as C Corporation or Limited Liability Company (LLCs) offers unique tax and liability benefits for your small business, and keeps it separate from your personal credit.

Advantages for your business to have a separate legal entity, means it can own assets, borrow money and perform business functions without directly involving your own personal assets and money.

If you are unsure of the best way to set your business up, you may want to talk with a business counselor at your local Small Business Administrative Office.

Sole Proprietorship

If your business is going to be a one person operation, you may choose to operate as a sole proprietorship, which is very common for many small or home based businesses.

Advantages to setting your business up as a sole proprietorship is your profits will be taxed as your income and the personal tax rate is lower than a corporation tax rate.

Disadvantage as a sole proprietorship would be, you do face liability for any debts or legal issues for the business and your personal credit rating will be affected should you have any business credit issues.

If you already have a good personal credit rating, this can work to your advantage in obtaining additional credit for your small business.

It may be easier for you to obtain some small business credit cards for your business to help you keep track of your business spending.

Keeping things separate from your personal business is always smart regardless of how you set your business up.

Having a strong credit rating can be one of the most important factors should you find your business in need of a small business loan.

In today's economy, a good credit rating is vital when it comes to operating and running any successful business.

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