The best structure for building business credit is one that will:
- Separate you from your business
- Has its own tax identification number
- Separates the debts of the business from that of the officers/board members or shareholders
The business structures that will do this are:
- C Corporation
- Limited Liability Corporation (LLC)
- S Corporation
This is not to say that building business credit cannot be accomplished with a sole proprietorship or partnership but in the end it will be limited.
The benefits of a C, S or LCC
- Limited personal liability of officers and officers, board members, shareholders or members
- Ability to separate personal and business credit, leveraging both
- Protection of personal assets from the business
- Easier to raise capital
- Easier to solicit investors
- Lower tax liability
- Corporate image
- Lower risk of IRS audit
You can build corporate credit yourself. But let the professional build it for you so that you can achieve the maximum limits for the business at the time they are building the credit.
All the above are general guidelines only, consult with an associate or attorney to understand the full potential.
When is the best time to incorporate?
The best time to incorporate is when your business
|Is a high liability business.|
|Has over $25,000 per year in sales|
|Wants to take advantage of the many tax benefits of a corporation.|
|Wants to utilize the many retirement plans for officers/owners.|
|When an Entrepreneur wishes to use business instead of personal credit|
(The above criteria is only a guideline)