LLC credit card

[Ljdub]

What is the name of your state (only U.S. law)? California

i am in the process of starting a LLC with 2 other members..in order for us to build credit, we are going to ge a credit card, so my question is will each of the members receive one? and if so would their credit debt affect the LLC as a whole or just their credit just incase one member chooses to purchase something with it that they shouldn't?

Also when just starting out how can i get the highest credit line possible?

thx ahead of time!

[Zigner]

I'm gonna keep an eye on this thread

[Antigone*of*Greece]

Originally Posted by Ljdub

What is the name of your state (only U.S. law)? California

i am in the process of starting a LLC with 2 other members..in order for us to build credit, we are going to ge a credit card, so my question is will each of the members receive one? and if so would their credit debt affect the LLC as a whole or just their credit just incase one member chooses to purchase something with it that they shouldn't?

Also when just starting out how can i get the highest credit line possible?

thx ahead of time!

First of all, good luck getting credit if you are just starting the LLC.

Please be aware of what you will be getting yourself into when you do get approved. One or all of you will most likely be asked to sign a personal guarantee. Yes, if your LLC goes under they will come after one or all of you personally.

You will want to research the various credit card providers. Many cards have features that will allow purchases from only certain types of vendors. You will also find that assigning a credit limit to each person individually is also a feature available in most cards.

If you have any feeling in your gut that this could go wrong...don't do it. You could find yourself responsible for a lot more than you're bargaining for.

As a banker, I don't suggest obtaining credit for an unestablished start-up. 9 times out of 10 all parties end up losing.

[mrgonzo]

Yes, no one will give a startup LLC a credit card. You will have to sign off personally and use your own credit.

You'll also run into this if offering credit card payments, the credit card companies will want you to sign off on your personal credit and social security number rather than the companies EIN - it kinda defeats the whole purpose of the LLC.

[Ljdub]

would it make a difference if we started a s-corp instead?...would we still individually have to sign a personal guarantee?

[Antigone*of*Greece]

Originally Posted by Ljdub

would it make a difference if we started a s-corp instead?...would we still individually have to sign a personal guarantee?

still no credit...still a personal guarantee.

doesn't mean you can't try.

[Some Random Guy]

The problem is that you will have a startup entity with no history and no assets to secure the debt with and you are looking for a way to make the principals not liable if the business goes under.

Why would any credit card company want anything to do with that? They really like getting paid back when they lend out money.

[Antigone*of*Greece]

My crystal ball is out for repairs today but because I'm got this "gift" of divination I can certainly tell what will happen.

Some CC company is going to give OP and his buddies credit cards. At least one of the buddies is going to go nuts on the card and leave the others high and dry. The business is going to fail because they went into this completely unprepared and without enough knowledge.

When the creditor comes after OP, we will again see our friend in a different post. His question will go something like this "See, I had this business and my partner spent money like it was going out of style. Now I've got this credit card company coming after me for a debt that isn't all mine. In fact it is a business debt and belongs to my LLC - it's not even my personal debt. Can this horrible, scum-sucking debt collection company do this to me? They have their nerve, don't they? They keep calling and they won't stop - what can I do?"

If gambling was legal...I'd give myself really good odds

[Ljdub]

ha, that was actually pretty funny and i prolly would of done that in the near future, so thx...so i guess the question is.....how does a startup LLC build credit?

[Some Random Guy]

how does a startup LLC build credit?

By not being a startup anymore - through years of paying bills on time and having significant tangible assets. A CC secured by a personal guarantee for several years also helps.

Frankly, in today's credit market, I wouldn't expect you to not have a personal guarantee for the forseeable future.

[Antigone*of*Greece]

Originally Posted by Ljdub

ha, that was actually pretty funny and i prolly would of done that in the near future, so thx...so i guess the question is.....how does a startup LLC build credit?

Some Random Guy is absolutely right about how and LLC or any other entity builds credit.

You are really going to have to go into this venture with plenty of your own cash. In addition to that be ready to sign personally anytime you want a bank to take a chance on you. If you look at it from the bank's perspective, they want you to put yourself on the line if they are going to put themselves on the line for you.

I really hope my "divine" ability is way off base here. I really hope we don't see you posting in the future about how to get yourself out of trouble. Do things, but do them thoughtfully. Take action, but act prudently.

take care, ana