Starting a Business
One of the most popular ways to fund a startup or incorporate a business is with a credit card. However, many entrepreneurs
do not take into account the number of risks when opting to do so.
Many entrepreneurs fail to read the fine print when they respond to a credit card offer in the mail and, as a result, misunderstand a business credit card's impact on their personal credit.
"Since the vast majority of businesses in the country are sole proprietorships, the difference between personal credit and business credit is murky from a bank's perspective," Asheesh Advani wrote for Entrepreneur
"Unless your business is incorporated, you're the de facto guarantor of all business debts. So if your business has a slow sales quarter and you fall behind on your credit card payments, your personal credit rating and your personal ability to borrow are at risk," he added.
An incorporated business's credit card can still have an impact on your business if you are required to guarantee it. Many banks will require businesses to do this, often signing forms that imply you will be responsible for the whole amount of debt.
This article is brought to you by Vcorp Services
– specializing in the review and preparation of entity formations
. From obtaining a tax identification number to preparing Articles of Incorporation
, Vcorp Services can get your business off the ground.
Vcorp Services assists in the creation of new businesses and helps maintain existing businesses in
all 50 states. Quick, accurate and at the lowest rates, Vcorp's knowledgeable and experienced staff
has helped form thousands of new businesses including: LLCs, S-Corporations, C-Corporations,
Partnerships, Non-Profits and Professional Corporations. Vcorp works with entrepreneurs, legal and
tax professionals, as well as real estate experts to set up and maintain businesses across the
country. Vcorp also specializes in helping small businesses to get started, grow and remain in
compliance with federal and state regulations.