Your Business Needs To Be An Entity To become bankable your business must be a separate legal entity
The only way to completely separate your personal credit from your business’s credit is to have a legal business entity such as an Incorporation or LLC. Action items for this step:
- Set up a business entity or make sure your business entity is set up correctly.
- Verify that your business legal name is not going to create any trademark infringement.
- Make sure your entity is “In Good Standing” and Foreign File your entity if required.
- Your entity should be filed using a USPS listed business address, not a residence or mail stop.
Why do you need a business entity to build business credit? It is best to build business credit with an LLC or Corporation (S or C Corporation). Creditors, Lenders, Trade Accounts and so on prefer to see an actual business entity. Furthermore filing and using a business entity to build business credit can separate you personally from the liability of operating your business. Unless you’re required to operate as a LLP or other type of partnership (Medical Practice, Law Firm, CPA, etc.), you should create a business entity. Your personal and business credit can never be truly separated if you operate as a sole proprietorship or partnership – everything you do remains “personal”. Don’t be fooled! The business credit reporting agencies will let you build business credit reports under a sole prop or partnership but these are completely worthless as everything you do under those is 100% personal which makes you personally liable for each and every business debt. Don’t do it. Compliance Item – Must Have A Business Entity Compliance Item Fix – Form An Entity Haven’t formed an LLC, C-Corp or S-Corp for your business yet? Protecting your personal credit and assets is just one of many reasons to operate your company as a separate entity (LLC, C-Corp, S-Corp, etc.). Whether you’re a single owner-operator or a larger company with employees, it’s the right decision. Get set up easily with a corporate entity that best fits your needs. Your business cannot become Bankable and stand on it’s own for financing without being its own entity.