Stage One of the Business Credit Success Guide
How to Build Small Business Credit with No Personal Guarantee

Step 3 ~ Choose a Legal Entity

Now that you have a name picked out it is time to choose the right structure for your business. First, realize that operating as a Sole-Proprietor or Partnership will ensure that business credit issuers will ALWAYS ask for a personal guarantee on any business credit applications. This is a very important decision that will have long-term affects so please consider all of our advice below when choosing the legal entity for your business.
Choosing the right entity

In order to build business credit separate from your personal you need to choose between a C-Corporation, S-Corporation or an LLC.  What’s the difference?

See our Resources page for a basic guide to understanding C Corporations, S Corporations and Limited Liability Companies (LLCs)
Which state should I file my entity?

It is recommended to file your entity in the state that you do business as lenders will want to see you doing business in the state where your entity is registered.
Filing your new business entity

There are two options available and which to choose depends on your specific situation.

• Do-it-Yourself ~ The paperwork to file your new corporation is likely available through your state’s Secretary of State website and can be filed by filling out and submitting the application along with paying any applicable fees.

• Expert Assistance ~ We highly recommend using an expert to help setup your business entity the right way, at least the first time. The cost is nominal compared to the long-term benefits and ultimately the ease of approvals for any business credit applications.  Your lawyer or CPA is able to set up your legal entity but it is our experience that they will charge at least double of what some of the online companies charge that specialize in structuring entities nationwide. It can be confusing searching and comparing companies so we are happy to recommend MyNewCompany who we found to be the best and most cost-effective service available.

• If you choose to use MyNewCompany, we recommend purchasing the Standard Package as a few of the additional benefits of the Complete Package can easily be done on your own for free through our help in this guide.  However, we do recommend adding on the Corporate Kit, MyCompanyForms and QuickRecords Complaince Service to help expedite the steps in Stage One.

Congratulations!  You now have the fundamental starting point for separating your business from your personal and allowing you to qualify for business credit without a personal guarantee.