If you're a serial entrepreneur or have multiple business ideas, starting an LLC to serve as an umbrella for your various ventures can be a smart move. It can simplify your legal and financial obligations, help you build credit, and even protect your personal assets.
Let's say you have three business ideas: subletting on Airbnb, renting out cars on Turo, and decorating Airbnb spaces and selling online. By creating an LLC to cover all of these businesses, you can streamline your operations, reduce your liability, and potentially save money on taxes.
To get started, you'll need to choose a name for your LLC and register it with your state. Depending on where you live, you may also need to file additional paperwork and pay fees. Once your LLC is established, you can start setting up separate business entities for each of your ventures.
For example, you could create a separate LLC for your Airbnb subletting business, one for your Turo rental business, and one for your decorating and online sales business. Each of these entities would be owned by your main LLC, which would act as the umbrella organization.
One of the benefits of this approach is that it can help you build credit for your new businesses. By using your LLC's credit to finance your various ventures, you can establish a strong credit history for each entity. This can make it easier to secure loans, credit lines, and other forms of financing down the road.
Of course, building credit for new businesses can be a challenge. Here are a few tips to help you get started:
- Open a Business Bank Account: One of the first things you should do when starting a new business is to open a separate bank account. This will help you keep your personal and business finances separate, which is important for building credit.
- Get a Business Credit Card: Once you have a bank account set up, consider applying for a business credit card. Use it regularly and make sure to pay your bills on time to build your credit score.
- Establish Payment Terms with Vendors: If you work with vendors or suppliers, ask them if they report payment history to credit bureaus. If they do, make sure to pay your bills on time to build your credit.
- Monitor Your Credit Score: Finally, keep an eye on your credit score to see how your efforts are paying off. You can use free credit monitoring services or sign up for paid credit monitoring tools to stay on top of your score.