The only way to completely separate your personal credit from your business’s credit is to have a legal business entity such as an Incorporation or LLC.
Action items for this step:
- Set up a business entity or make sure your business entity is set up correctly
- Make sure your entity is “In Good Standing” and Foreign File your entity if required
Why do you need a business entity to build business credit?
It is best to build business credit with an LLC or Corporation (S or C Corporation). Creditors, Lenders, Trade Accounts and so on prefer to see an actual business entity. Furthermore filing and using a business entity to build business credit can seperate you personally from the liability of operating your business.
Unless you’re required to operate as a LLP or other type of partnership (Medical Practice, Law Firm, CPA, etc.), you should create a business entity. Your personal and business credit can never be truly separated if you operate as a sole proprietorship or partnership – everything you do remains “personal”.
Compliance Item – Must Have A Business Entity