| By :
Marco Carbajo
By the end of this article, you will have more knowledge as a small business owner, all because you learned two very important words, and the specific reasons why those words are so vital. Both words can impact you and your company in a variety of ways depending on how you structure, plan, and implement some key corporate strategies. Whether you run a business from home or lease office space it's inevitable that you will eventually need some type of small business financing. Whether it's in the form of credit cards, loans, lines of credit and so on both of the following words can make all the difference in how you obtain the money you need. The Most Important Word is "Business Credit" Did you know that business credit has 10 to 100 time's greater credit capacity then your personal credit does? When you rely on personal credit scores to apply for business financing your mortgage, auto loans, credit cards and even student loans are affecting your ability to qualify. More importantly if you do qualify you end up putting your personal credit at risk each time your company incurs debt. For example, a credit card that you use for business that reports to your personal credit reports will impact your personal debt to credit limit ratios and credit scores. But when you take advantage of corporate credit you truly get to leverage the power of your business. For example, your business credit files will include your company's payment history and may include revenues, assets and company financials depending on how much information you furnish to the business credit bureaus. In addition your files will not show your personal debts or personal financial obligations. What's even more exciting is if you own several businesses each of the companies will have its own credit capacity giving you unlimited financing potential. No two corporate credit identities are alike and each company has the ability to establish its own creditworthiness. The Other Word is "Liability" Did you know that as a sole proprietor all of your company's liability rests upon you personally? This puts you and all of your personal assets at risk not to mention your personal credit too! But by setting up a corporation you can shield your personal assets and limit your personal liability. Your corporation will be recognized as a separate legal entity and you must treat it that way which includes avoiding the co mingling of funds, assets and even credit files. Did you know that the most litigated issue in corporate law today is piercing of the corporate veil? What's even more alarming is it's more common with small privately held companies. That's why it's so important for you to establish business credit for your company and maintain the proper records. Let these two words be a reminder to you that success in obtaining the funds you need to grow your business should not be based solely on the amount of capital you can obtain but more importantly how you obtained it in the first place.
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