Unlike an S or a C Corporation, an LLC’s structure is quite flexible. A limited liability company (LLC) is a corporate structure where by the members of the company cannot be held personally liable for the companies debts or liabilities. It also give you the perk of pass through taxes, limited liability and legal protection for your personal assets. Limited Liability Companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship.
HOW TO BUILD BUSINESS CREDIT?
Establishing business credit is an important step for any new small business and helps you to 1) maintain a credit history separate from your personal credit history and experience the business benefits of having good business credit, and 2) demonstrate separation between owners and the business.
WHY SEPARATE BUSINESS AND PERSONAL CREDIT?
By having a business credit history separate from your personal one, you can mimimize the effect negative events one might have on the other. For example, if you have some financial missteps that impact your personal credit history and score, they won’t impact your small business credit if you have established a clear separation and vice versa.
WHY SEPARATE YOURSELF AND THE BUSINESS?
Unless you are operating your small business as a sole proprietorship or general partnership, you need to demonstrate that the business is separate from the owners. One of the the key benefits that corporations and LLC’s provide the owners is protection of their personal assets. Keep this protection in place by consistently showing clear separation between the owners and the business.