LLC and business credit cards

3 Replies

Hello guys, I have a question and hope that somebody can explain this to me a little more. When is it convenient to have a LLC and what is really the purpose of it? I been reading about it, and feel like I can use it for the purpose of getting a business credit card. But I only own two single family homes, I live in one and renting the other one. So idk if this would be beneficial to do for me or not. I do plan on buying more rental properties in the near future.

Great Q! From what I've researched over the years, the main benefits are liability protection and tax favorable exit strategies when you sell. The other potential is commercial real estate through business credit but these days you need to personally guarantee any great interest rate so what it can do is help you move personal debt off your credit reports to help your DTI for residential. LLCs are very flexible, aged LLCs faster and getting a business credit card will take time if you start from scratch. If you want to DIY, check out CreditBoards.com and find the forum on Business Credit. What are your financing goals?

Originally posted by @Maria Luna :
Hello guys,

I have a question and hope that somebody can explain this to me a little more. When is it convenient to have a LLC and what is really the purpose of it? I been reading about it, and feel like I can use it for the purpose of getting a business credit card. But I only own two single family homes, I live in one and renting the other one. So idk if this would be beneficial to do for me or not. I do plan on buying more rental properties in the near future.

The best use of an LLC is to protect your other assets from risk. But, buying an Umbrella Insurance policy can be a better choice. An LLC has to have cash flow in order to establish credit for a credit card just like an other person would have to. Whether it is worth the time and effort is a personal choice. AN LLC has to be set up and maintained properly to have any benefit and by and large, statistically, most people are ill-informed on LLCs and do not run them in a way that actually gives them the protection they bought them for. Yes, they also cost money.

@Maria Luna

As others have mentioned - the primary benefit of creating an LLC is for asset protection. If the LLC is managed properly - your other assets will be protected if something were to go wrong with the business.

Another topic you touched upon is business credit. Business credit is good in a sense that it will be attached to the business and not necessarily to your credit score or DTI ratio's.

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