Disclaimer: We will not be held liable for any information held on the sites listed below, I haven’t researched the companies putting out this information, I have simply tried to include comparisons coming from all sides (ie companies who help incorporate, those who help create proprietorships and those who specialize in creating a Limited Liability Company, or LLC) I do not recommend using any of the companies I am linking to, I just found them in Google.
The majority of our clients are sole proprietors, or in a partnership. Although this is the most common structure of small businesses, many experts say that small business owners should revisit the decision to structure their businesses in such a potentially risky fashion. I have put together here some links that compare different structures available to small businesses. I hope they give y’all a good picture of the options out there:
Many websites I have been to have recommended BizFiling as a source for small business structure comparisons.
However, I found this chart, which is similar, but also includes partnerships in the comparison. The website it is on (http://www.llcweb.com/struc.htm) contains further information comparing Sole Proprietorships vs. General Partnerships vs. Limited Partnerships vs. C Corporation vs. S Corporation vs. LLC. However, one should keep in mind that the website is put together by people who want you to pay them to help you form an LLC.
This website seems to just be quoting a book (which is fine, and suggests it is relatively unbiased). It breaks down each option for business structure.
Here is an independent article written on incorporating.
Although your credit score is totally irrelevant to working with us, here at Fast Up Front, it is still key for small businesses like yours. Despite that, the vast majority of small business owners don’t seem to understand how business credit is established at all, let alone GOOD business credit.
Because of its importance, I have compiled a list of steps to establishing business credit:
(Note: The scale for business credit scores ranges from 0 to 100. 75+ is an ‘excellent’ business credit rating. This is a totally different scale from personal credit scores, which range between 300 and 850 with an ‘excellent’ score of 680+.)
Obtain an FIN or EIN from the IRS. Go to the IRS website for information on applying. I’ve put together a list of links that compare the liability implications, cost, and other issues involved with running a sole proprietorship vs. a partnership vs. a LLC vs. a corporation. See my entry on small business structures.
Register with the business credit bureaus.
The four major business credit bureaus are (in order of importance):
Dun & Bradstreet (DNB, D & B) – Paydex score
Experian Business – Payquo score
Business Credit USA
Make sure you are in legal compliance, etc. Proper licensure, etc. Follow local, state, and federal requirements for your industry. Additionally, you may want to consider membership with the Chamber of Commerce in your area, or the Better Business Bureau.
Have supporting materials available. An extensive list of a typical request list from creditors can be found here. You will probably have to write a business plan/summary and provide balance sheets, and other financial statements.
Maintain good relationships with your vendors. Make sure they report your payment history with the business credit bureaus. These vendors provide the foundation of your credit report and can be used as references if you want a commercial business loan. Clearly, part of maintaining a good relationship means timely payment, etc. But it also means, working with one person at each vendor and creating a friendly working relationship. In many cases, the people you work with on a regular basis at vendors can count as “employees” with the credit bureaus, raising your score.
Of course, you could just forget all this, and use us – we don’t need to run a credit check in order to put money in your hand.
Sites I used to compile this list included Ibank.com, entrepeneur.com, andstrongbusinesscredit.com
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