How to Keep Your Business Credit Separate from Your Personal Credit

How to Keep Your Business Credit Separate from Your Personal Credit

Did you know that most small business owners who apply for loans are turned down?  Don’t take my word for it, this gem comes from the Federal Reserve Bank of New York.  According to the report, reasons for the high rejection rates include impaired personal or business credit and a mismatch between borrowers and lenders.  The first reason is quite alarming.  It turns out that most people understand personal credit and how to use it. But when it comes to business credit, there is a lot of misunderstanding.

When business owners don’t understand how to build their business credit, they don’t qualify for banks leaves leaving many believe their only option is to get loans from friends and family.  However, this does not help solve the broader issue which is how to keep your business credit separate from personal credit.

Why is separating your personal and business credit necessary?  The first reason is that businesses tend to be heavy users of credit; on average 10 times, more than a consumer. This brings us to the second reason; heavy credit usage can sink your personal credit. Beyond these two reasons, separating personal and business accounts is an imperative for tax purposes.  

So how can you get started?  The first step is to register your business as a separate entity. This could be as a sole proprietor (though not recommended), an LLC, or a corporation. Registering a business is not that difficult these days.  While you can ask an attorney or an accountant to help you, you can also go online and do it yourself.  In most states, you can set up a new company in less than a week.  Just don’t forget to get an Employer Identification Number (EIN) from the IRS when everything is complete.

Now that you have your business registered, you want to set up a bank account for your business. This will be the main bank account you will use for all the funds flowing through your business. The process is simple and some bank might allow you to open a new bank account online.  

One question which usually comes up when a business owner finally sets up their business banking account is how do they pay themselves.  To do so, you will want to write a check to yourself and then deposit that check into your personal account. This will keep your business and personal expenses separate by showing a clear trail of payments from the business.  In addition, this will help when you apply for loans for your business as lenders will want to see your bank statements.  

So, you have a company and a business banking account, but how does this help you separate your business credit and your personal credit?  To do so, you will want to get a credit card for your business and make sure that you always pay on time.  As an FYI, you can also deduct the interest payable from your business credit cards, this will help to reduce your corporate tax load and is just an added benefit of separating your business credit from your personal credit.

Another benefit is that a business credit card will help to move charges from your personal credit accounts.  This will reduce personal credit usage and will make it easier for you and your family to do the things you want to do in the future.  For example, if you have an excellent credit score (say an 800 score) but you have maxed out your credit cards, your score could fall by 100 points or more.  When this happens, you will fall into credit purgatory as most lenders will be scared off when you apply for new credit cards, loans, or lines.

If you don’t have great personal credit and are not sure where to begin, there are several retailers who offer small credit lines for businesses without pulling a credit report.  This includes retailers such as Home Depot, UPS, and Staples to name a few.  If you are not sure whether a retailer you have in mind has such a program, the best option to contact their credit division to learn more about the process.  This can be a big plus for your business

Registering your business, setting up a bank account, and getting a business credit line not only helps you protect your personal credit, but it sets your business on the right path to getting the loans you need to grow.  So, don’t delay, get started today.

Your Complete Guide to Downsizing Your Home

Downsizing home

Downsizing your home can be exciting and daunting at the same time. Moving into somewhere new is great, but there is a lot of stress that comes with moving into a smaller place. You need to make sure that you don’t take too much with you. And you will also need to make sure that the space is adequate. Whatever your reason for wanting to downsize is, this guide will help you do it.

Assess Your Needs

First of all, you need to assess your needs. You obviously want to take less with you and live in a smaller place. But how drastic do you want the downside to be? To answer that, you need to know how you will live and who will be visiting. You don’t want to be living in a home that is not right for you or doesn’t have the right level of space for visitors. So, be honest with yourself and think clearly about what your living needs are.


Slowly Start Offloading Things You Don’t Want

Before you actually go ahead with the move, you should start trying to slowly offload items. When you do this, you can make sure that you’re not left with too much when the time to move arrives. Decide what you don’t need or won’t have room for, and then start getting rid of it. You could give some items to other people who might want them, such as friends or family members. Or you could sell items online to help fund the move.

Find the Perfect Long-Term Home

Of course, the actual process of finding the home that you’re going to move into needs to be taken care of too. If you don’t get this right, then the entire process will be a failure. Spend some time getting to know the area and neighborhood you want to buy in. And then make sure that it’s the kind of home that is going to meet your needs in the long-term. When you downsize, you usually don’t want to be moving again anytime soon.

Move Any Excess Items Into Storage

If the day of the move is getting closer, and you still have too many possessions to take with you, put them in storage. This is a simple and easy way of finding a place to store the things you don’t really want to take with you while you decide what to do with them. This makes your life a little easier, and the eventual move will be smoother as well. Canning Vale Storage Units are available if you need to use them.


Prearrange Your Furniture Ahead of the Move

You can make the move easier on you by prearranging your furniture ahead of the move. All you need is a floor plan for the home. You can then measure your furniture and decide where it will all go. That way, you can ensure that everything you take with you will have a space. And you won’t have to spend as much time thinking about these things when you move in.

How 4 CEOs Got Their Start Up the Corporate Ladder

How 4 CEOs Got Their Start Up the Corporate Ladder

How many times have you heard about the guy or girl who went to college, got the awesome job, and quickly worked his or her way up to becoming the CEO? Probably more times than you can remember. But what about the girl who started out as a hostess and worked her way up? Or, the guy who retired from the military and got lucky? These stories are out there, and here are the stories of four CEOs and how they got their starts climbing up the corporate ladder.

Kat Cole

Kat Cole didn’t come from a life of privilege or even a life that afforded things many of us take for granted. When she was just 9 years old, her mom left her alcoholic father and took Kat with her. Kat’s mom worked hard and did the best she could on her single income. Kat began working at 15 and a year later got a job hosting at Hooters. She stayed with Hooters, and at 18 became a Hooter’s girl/waitress. She worked hard, and at 19 years old she was offered a chance to be part of a team that opened a restaurant in Australia. She worked for them for 15 years learning the business and has now become the successful CEO of Cinnabon.

Mark Hurd

The current co-CEO of the Oracle Corporation started out doing what many people won’t do — sales. After attending Baylor University on a tennis scholarship and graduating in 1979, he got hired by NCR as a junior salesman. He spent the next 25 years working his way up through general operations, management, and eventually became president. He took on an aggressive sales-like management style that earned him the spot of CEO at Hewlett-Packard. Today, he uses that same management style and is an outstanding co-CEO for the Oracle Corporation.

Robert Myers

Not many CEOs can say that they spent several years serving their country in the military, let alone 22 years. But, that is exactly what Robert Myers did before going to work for Casey’s General Stores, Inc. After retiring from the army in 1988, he was hired as a facilities manager. Over the years he worked his way up and eventually became president.

David Rusenko

David Rusenko spent his childhood attending schools in Europe and traveling the world, all while developing a growing love for computers. By the time he was 13 years old, he was building websites and increasing his knowledge of web design. Although he went to Penn State and studied information sciences and technology and management information systems, it was his start as a child that led to success. He wanted someone with zero coding experience (like when he was a child) to be able to build a website easily; thus Weebly was born.

Whether you want to be a CEO or not, you have to admit that these stories are inspiring. So no matter you want in life, dream big and don’t sell yourself short — you may just end up in an article about your life like these five one day.