Many business owners are unaware of the value of incorporation. Even fewer understand the essential steps necessary for building the kind of corporate credit that will enable them to take full advantage of their entrepreneurial status.
Incorporation makes your business entity separate from you, the business owner – a separate entity with its own liability. Incorporation separates your business assets from your personal assets. If someone decides to sue your company, they cannot touch your house, car, or anything else owned by you or your family.
But eliminating your personal liability for your company’s debts and actions isn’t the only reason to incorporate your business. Let’s face it. You are in business to make money. And to make a profit and sustain your business, you need capital –in the right place, at the right time – to help your business grow.
By incorporating your business, you enable your business to begin establishing corporate credit, which will ultimately provide the funds you need to grow your business and one day get to the point where your business can obtain funding without a personal guarantee. Keep in mind, this will take time to accomplish.
But incorporating your business doesn’t automatically qualify you for all the corporate credit you need, much less the best type of corporate credit. Your goal should be to secure cash – not lines of credit that are tied to particular stores or vendors – for which you do not need to offer a personal guarantee. To secure this “Holy Grail” of corporate credit, you need to follow a well-defined, step-by-step system to build your corporate credit history and business credit score.
Some of the preliminary steps every entrepreneur needs to take to secure excellent corporate credit include incorporating your business, maintaining a physical office, obtain a local phone number and a 411 listing, and get a business license and have a business that has real revenue.
These steps begin to pave the way for building your credit score with business credit bureaus. After you follow those preliminary steps and provide the bureaus with the information they require, and go through our Corporate Credit Builder Program, you will be prepared to approach the handful of lenders who will give you a cash line of credit with no personal guarantee. In other words, those few lenders will help you keep your business and personal assets separate AND give you the cash you need to grow your business.
About the Author
Kylon J. Trower is 20+ year serial entrepreneur with a background in residential and commercial lending, business credit development and financing. Most recently, he's built a national network of financial professionals dedicated to preserving the lifeblood of our economy, the American small business sector.
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