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Incorporating, and business credit

Discussion in 'Starting a Lawn Care Business' started by EgansCountryGardens, Feb 18, 2007.

  1. EgansCountryGardens

    EgansCountryGardens LawnSite Member
    Male, from Plymouth, MA
    Messages: 165

    I'm not new to the world of landscaping. I've been a sole prop landscaper with a fairly successful company for the last 8 years, and we do nearly 1 mil. per year at the moment. Well, I need to incorporate for liability reasons, and my question is - After we reorganize and incorporate, does business credit get based off of my fed. tax id no. or does it go through social security number of me personally? This is what I'm trying to avoid. - Using social security number. Does anyone know this. And how long does it take to establish business credit anyway. I'm not talking about the thread about staples credit cards for $250. I'm talking about large items, like truck and equipment purchases.

    STONE SCAPES LawnSite Member
    Messages: 145

    yes you will have to use your ss#. Family has been in business for over 25 years in the photo industry. we where incorporated and dad had to put it under him every time and these were 250k notes that had to be paid off in 5 years.
  3. Ecoscape01

    Ecoscape01 LawnSite Senior Member
    Messages: 375

    I wondered about this for the future. I am a sole prop and haven't started yet but I looked into the different aspects of sole prop. vs. inc. or llc but I thought that when you incorporate, the business becomes a completely seperate entity and credit is granted based on being able to show positive figures on prof/loss sheets and also by using company assets for securing loans, etc?
  4. paponte

    paponte LawnSite Silver Member
    Messages: 2,366

    Let me get this straight... you've been in business for 8yrs, gross almost $1mil per year, and your business has no credit whatsoever? I find that truly hard to believe.

    As far as a corp. having credit, you will most likely have to offer some type of personal guarantee on anything until you establish business credit in substantial forms. :rolleyes:
  5. EgansCountryGardens

    EgansCountryGardens LawnSite Member
    Male, from Plymouth, MA
    Messages: 165

    Paponte, if you read my original post, you'd know what the question was. I didn't say that my business had no credit. It's all under me as a sole prop., and my social security number. That wasn't the issue. The question was - Once I INCORPORATE, would I have to be using my social security to get business credit. This is what I'm trying to avoid. I'm trying to keep the business, and my personal seperate. Also, you say that I will have to offer a personal guarantee- What do the big businesses do? Who signs the personal guarantee for Exmark to get credit from a vendor? Does the president of the company? He's technically supposed to be just an employee. What if he quit? Does his social security no. stay attached with all credit to the company?

    If anybody out there really knows the answer, please tell.

    Paponte, by the way, we were in business for six years grossing $700,000.00, and we had NO credit at the time. It is possible to be a successful business and not rely on other peoples money to get there. We own EVERY piece of our equipment. We just last year opened accounts with some vendors to carry us over on some really large jobs that we had- Like $70,000.00 jobs plus before getting final payment
  6. paponte

    paponte LawnSite Silver Member
    Messages: 2,366

    Egan, if you read my original and ONLY post you would clearly see that I answered your question. If you dont like the answers or need further assistance in understanding them, you can just ask.

    Like I stated, if you are a newly formed corporation they will most likely want a personal guarantee. By doing this you are not just an employee of the corp. you are an officer and have ownership. If you have ownership in a major corporation and you "quite", well then quite frankly you are an idiot. No officers quite their ownership in a corp. they usually get bought out.

    Not only will you be TRYING to keep you personal and business financials separate... you WILL be. You have no other choice, or else you will be piercing the corporate veil. By signing a personal guarantee you are not mixing your personal credit with the companies, you are guaranteeing payment if the company defaults.

    Once your established now on the other hand... like your referral to Exmark, you have an established credit rating and usually a D&B number. At this point anyone can look up your rating and open and "instant" account based on your net worth, number of employees, and years in business. You must first crawl before you walk.

    As far as your numbers, I really couldn't care less what you gross. If you are trying to impress me, do yourself a favor and don't waste your time. Gross don't mean jack... shoe me value. To be in business for 6 years, and have absolutely no credit worthiness is beyond me.

    Hopefully someone that "really knows the answer" can tell you. With 23 posts, looks like your making a great first impression. Posts like these are the reason for the avatar. :)
  7. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Messages: 2,524

    I changed over to an LLC from sole prop. last year. My Hustler dealer told me I needed to be an LLC for two years before their lenders will consider me. My credit union has been helpful though as right now I'm discussing a new loan for another Hustler with them.

    I'm also getting a lot of "business" credit card offers and will probably apply for one soon since that helps get credit established so quickly.

    Ironically, I'm a 40 year-old with an excellent credit rating but they look at Lawn Specialties, LLC as a brand new baby.:laugh:
  8. echeandia

    echeandia LawnSite Bronze Member
    Messages: 1,131

    The business credit card is a personal credit card with the name of your business on it. It will be on your credit report.
  9. EgansCountryGardens

    EgansCountryGardens LawnSite Member
    Male, from Plymouth, MA
    Messages: 165

    Paponte, I don't think that it matters how many posts I have had. Does the answer to my question make a difference if I don't have as many posts as you? With 1897 posts, I think maybe you should spend more time with your business, than sitting here on lawnsite all day critiquing peoples questions!

    By the way "Mr. Knowitall about everything" - The word "quit" is spelt q-u-i-t, not quite. Also the word "show" is s-h-o-w.

    I'm not trying to impress you with my gross numbers either pal. I was just trying to make a couple points. One, being that I'm not just a guy with a toyota pickup and a new scag. Two, most importantly, that I don't need to use other money to build my business, other than what my business has already generated for itself.

    So here is your drama that you are obviously looking for. That is why you have so many posts. Also thanks for hijacking this thread, and changing the topic of the question that I was trying to ask to some of the more dignified members of this forum. Go rip someone else up on another post somewhere. The drama has ended here.
  10. trinitylandscape

    trinitylandscape LawnSite Member
    from Atlanta
    Messages: 7

    Check out creditboards.com in the business forum.

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