Any company’s corporate design or structure determines how many lines of credit it may receive. The banks tend to be less interested in extending their credit facilities to any business which is not an LLC or incorporate. Majority of the businesses with sound credit portfolios tend to be constituted as Non-Profit or C-Corp, S-Corp or an LLC. Now each business owner has to select the most probable kind of corporation for her/his business that is based on below-mentioned information.
- LLC: Limited Liability Company is much popular among the business owners who run small scale operations because of its simple structure. Any business that has less than 20 working employees would benefit from LLC status as per their Business Credit Score. These are the business hybrids that blend the corporation element with a business partnership. The LLC gives the corporation protection but runs on a business partnership model. Here taxes tend to be filed under the capital gains of each individual shareholder.
- S-Corps: It is somewhat similar to LLC. Here taxes are not processed at the entity level, while income tends to be filed under the capital gains of the shareholder. The IRS deputes a special designation for S-Corp’s taxation. Any small company that has 20 or more workers to it are considered eligible for the designation as constituted by IRS.
- C-Corps: This category puts the business owners in an absolutely safe spot as they are not liable for anything since financially they are a separate entity. Though, this category is subjected to double taxation which makes many business owners stay away from it. Here the corporation and shareholder dividends, both are taxed.
- Non-Profit: This is extremely tricky kind of structure because every business is meant to make a financial profit, but some such as co-operative societies do require to establish their structure accordingly. All finances of the non-profit are absolutely separate from that of the business owner as well as give protection with no liability. These are mostly tax exempted, as technically they do not make any profit or earnings. Any charity can qualify for being a non-profit entity as per their transparent Business Accounting.
Now filling papers as a corporation of any above kind will prove the authenticity of the company and consequently its reliability to the creditors as well as other investors who are interested to put money. However, building the portfolio does tame much effort and subsequent time, which has to be carefully crafted. Incorporating the right kind of structure and registering with the credit bureau is essential to an impressive portfolio to business credit.