Discover What Business Structures to Avoid When Building Business Credit
Building Business Credit - Discover What Business Structures to Avoid
I get asked this question quite often and thought I would clear the air on what
business entity selection is best for building business credit. This step by far
is the most important because it’s the foundation of your business credit. Not to
mention all the other important areas that entity selection affects such as taxes,
liability, asset protection and so on.
As a business owner, you have four real choices when it comes to business
structures for building business credit, and two bad choices:
* C Corporation
* S Corporation
* Limited Liability Company
* Limited Partnership
* Sole Proprietorship
* General Partnership
You can learn more about your four good choices by listening to my FREE Business
Corporations Seminar at http://www.startbusinesscredit.com
To learn why Sole Proprietorships and General Partnerships are so dangerous to you
and your family, read on.
A Sole Proprietorship is bad…
Have you heard the saying “You get what you pay for?” Well, you normally don’t pay
anything to start either a Sole Proprietorship or a General Partnership. Of course
you don’t get anything, either. Unless you count the following as valuable business
assets:
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Discover What Business Structures to Avoid When Building Business Credit
* Lots of personal liability
* No protection from your business creditors
* An increased risk of being audited
* Problems with valuation for a subsequent sale of the business
The reason for this lack of protection is because neither of these structures is
considered a separate legal structure. Instead, they are considered personal
extensions of you, if you are operating as a Sole Proprietorship, or you and your
partners, if you’re operating as a General Partnership.
And, because these business types are considered personal extensions of you, you
don’t have any protection from them.
But a General Partnership is Downright Ugly!
It gets even worse if you are operating with a partner as a General Partnership.
That’s because not only are you responsible for all debts and agreements you enter
into in the name of your business, you’re also on the hook for all of your
partner’s actions in the name of your business as well. This can be devastating if
your partner is financially irresponsible, and, because either of you can bind the
partnership; you have zero protection from your partner.
If You Don’t Choose a Good Entity, the Government Will Choose a Bad One for You!
If you’ve been doing business up to now without a business structure, both the IRS
and your state government have defaulted your business into either a Sole
Proprietorship or a General Partnership.
And that means you’re exposed.
Use a Proper Business Structure – If you want to build business credit and you want
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Discover What Business Structures to Avoid When Building Business Credit
to protect yourself from personal liabilities.
About the Author
Marco Carbajo is a business credit specialist that shows you how to separate
personal credit from business credit. Want to learn more about how to build
business credit and obtain unlimited financing for your business? Claim Marco's
popular FREE business credit seminar ($597 Value), available at: =>
http://www.businesscreditblogger.com
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