The Need For Separate Credit For Business

When my husband started his own trucking business more than 10 years ago, there was a lot more to it than we ever expected. We got lots of advice, some of it good and some of it not so good. One that we heard over and over again though that we did follow was to keep our business and personal credit separate. After hearing some of the problems that other self employed people we know have had though I am very glad we did.

This is a very common issue that comes up for owner's of small businesses, and one where too many of them make a dangerous mistake. They don't realize that when the two of them are connected that they could end up losing everything. I agree that it can be a major blow to lose your business. Yet you certainly don't want to further compound the issue by losing your home and your car as well.

We did get a business credit card and line of credit early on as well. We got both of them from the same lender which was good for us. Yet the interest rates on them weren't something I was proud of. I am happy to say though that we have proven to be worthy of that credit. We still have those same two accounts with the same creditor today.

Of course the credit limits have increased while the interest rates have continued to drop. They want to keep us happy and to tell you the truth I am not interested in looking for such credit forms anywhere else. I love the fact that they gave us a chance and that means a great deal to us. Too many other lenders wanted us to use our personal credit and even our home as collateral for such business accounts.

You have to understand that any small business has a great deal of risk associated with it. More than half of them won't make it for the first full year. This is a sad reality that you have to understand when you start a small business. This is why you don't want your personal credit to be associated with it. You may find it hard to move on when your business dreams didn't work out but at least you will still have your car to drive and your home to live in.

Financial difficulties are the major reason that so many small businesses fail. When you have the finances for yours separate from your personal finances you can see the big picture clearly. You won't have a false sense of security that things are going to be fine. This can help you to curb spending on business items that aren't a necessity at this time. Hold off until you have the profits to buy them.

It will become a regular habit to keep your small business and personal finances separate if you do it from the very beginning. You need to have a solid plan in place so that you can segregate the two of them. It will be more time involved initially but soon you will get a good system in place to take care of it. You need to be willing to heed this information if you want to protect both your business and your personal assets.

Hopefully your small business is going to do very well for you. Who knows, it could turn into a very large business for you some time down the road! While every type of small business is different there are enough key elements that are the same. Among them is that it is necessary to keep your small business credit and personal credit matters separate from each other all the time.

Article Source: http://www.myaddirectory.com

Robert Bain writes all about small business. Discover the difference between business credit and true corporate credit that the banks are hoping you don't discover.

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