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| The Difference Between Consumer and Corporate Credit |
By:
Patrick Gage |
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It's a common mistake made by new business owners. They think since they are the one running the business, they might as well go ahead and put all the business finances and their personal finances together, thinking, that's just one set of books to sort out at the end of the year. This is not true. There are a number of reasons you should keep the two types of finances in their own places:
• Organization – When it comes down to tax time at the end of the year, you may think having all your financial records in one place is a good idea. But the truth is, you will end up with quite a puzzle on your hands at the end of the year as you try to remember what each of those expenses last January were really for. It's much easier to have a separate spending account for your personal finances and a business account that is only used for business.
• Liability - No one likes to think about if things go wrong, but there is always the possibility that they will in business. If you have your business and personal assets separated and there is legal action against your business, only the business assets can be attacked to pay for the action. Likewise, if your business were to fail, and creditor came knocking at your door, having your business and your personal lives constructed as different entities will make sure that while you may have lost your business dreams, you won't lose all the rest of the things you own as well.
• Credit Record – There are a couple of reasons that separate consumer and corporate credit accounts are something you should consider. First it's a good thing for your business. As you build corporate credit it is essentially to have a track record, showing banks, lending institutions and other companies that you have been able to responsibly borrow and repay money and that you also pay your bills on time. This type of responsibility is positively looked upon. The second reason is that as we have already mentioned, businesses have bad times. It is expected that a corporate credit record will have some ups and downs and when it comes to that type of credit report, lenders will look at the overall picture. Meanwhile, if your consumer credit is being used for your business expenses, and things go downhill, it will ruin your personal credit as well. That takes many more years and a lot more work to come back from.
Pat Gage, The Opportunity Creator, has over 18 years experience in money and finance, business building, real estate investing and marketing. The Opportunity Creator is not only a sought-after business coach but he also is a national speaker, trainer, and life-long entrepreneur who himself has started several companies.
For more information, visit Gage’s site at http://www.10stepstomoney.com |
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