Personal credit issues - forming new business

[Sukee45]

Hi,

I am trying to form a construction company under my name but I am worried that my personal credit history will weigh down my business growth. Is there any way to get around the bad credit history? I heard forming a LLC would help but I don't understand how banks and lenders will not check my SSN and only use my EIN. Will collection agencies have access to my new business account? I want to make this new business completely separate, so if I need to pull a loan for vehicles or materials, my personal credit will not affect the outcome.

Thank you in advance for your help.

John

 

[army judge]

You need to sit down with an attorney and fully understand an LLC.
Or, do the research and familiarize yourself with LLC, Corp, S-corp, etc...
If you form a corporate entity, it will be insulated from your personal debts.
That is one reason people create them.
If you are opening a corporate account, your EIN is used instead of your social.
Banks vary as to what other supporting documentation is required.
Speak with several banks in your area, find out their policies.
You should also consider credit unions or savings & loans for checking type accounts.

If you're married, your spouse could possible be the CEO, President of your proposed entity.
Or, a sibling you trust, or even a parent, if they agree to be part of your vision.
Whatever you do, make sure evrything is in writing and legal.
You don't just proclaim a business to be an LLC.
There are several affirmative steps required, including officers and costs.

 

[Sukee45]

Thank you for the help. I just have another question in regards to the LLC. If I were to form a LLC, no other company, bank, or collection companies will be able to touch any of assets or bank accounts in the name of the LLC? Also, if I were put the LLC in another family members' name, would I have to be listed as an officer or any other position in the company to be able to operate the company?

Thank you in advance.

 

[army judge]

Thank you for the help. I just have another question in regards to the LLC. If I were to form a LLC, no other company, bank, or collection companies will be able to touch any of assets or bank accounts in the name of the LLC? Also, if I were put the LLC in another family members' name, would I have to be listed as an officer or any other position in the company to be able to operate the company?

Thank you in advance.

The assets of an LLC shield and protect the personal assets of the officers.

No, you wouldn't have to be an officer.
You could be a general manager.
You could be anything the relative and you agreed upon.
You could even be a volunteer or an intern.

 

[Antigone]

I would like to add that obtaining credit will be difficult if the majority owner of the entity has bad personal credit. As a banker, I see this day in and day out. We use global cash flow and both business and personal credit to secure loans and lines of credit; so the the personal credit is bad a loan/line will be difficult to obtain In addition, the principal owners of the entity will most likely have to personally guarantee any facility the entity obtains.