Monthly Archives: June 2018

Should You Really Care About Business

In short, yes you should care about business credit.

Business owners typically fall into one of three categories when it comes to biz credit.

  1. They are very familiar with it and have established scores with the 3 national business credit agencies for their company. Their vendor accounts and cards report good payment history in their business name only and their personal credit is not tied to their business.
  2. They are somewhat familiar with business credit and they may have a Paydex score with Dunn and Bradstreet. They also might have vendors and cards, but do not know if they are reporting their good payment history to the business credit agencies. They use their personal name and credit on most, if not all, business transactions.
  3. They exclusively use their personal credit to finance their business and do not know the benefits of biz credit, or that it even exists at all. Their personal credit and assets are tied so closely to the business that if the company failed, their personal financial situation would be destroyed as well.

Unfortunately, many business owners fall into the two latter categories, or somewhere in between. It is hard to blame them since there is such a great deal of false or conflicting information floating around, especially on the internet. There are very few sources out there that provide unbiased information about what business credit is and how to establish 3 good business scores. So how does it help a company and how does one build a solid credit profile?

Having a good business credit foundation not only protects the owners personal credit and assets, but it also makes larger and less expensive financing available to a business including bank loans, alternative financing, business cards, LOC’s, vendors, etc. Access to this type of financing can allow your company to:

-Free up working capital

-Take advantage of business opportunities

-Purchase/lease revenue generating equipment

-Grow and expand, etc.

The protection that separate business scores provided to a business owner’s personal finances cannot be understated. Many business owners end up destroying their own personal scores at the expense of their business, but it does not have to happen this way. There many tricks and tips that can be used to set up a business the right way to build business scores. Any business, from brand new startups to 10 year old companies, can benefit from some of these tips.

Once the importance of business credit is understood, the next step is finding out how to build your scores. The main thing to remember is the number sequence 1-3-5. To establish a good credit profile for your company, you will need to get 1 business bank loan, 3 business cards, and 5 vendor lines. These all need to report to at least one of the agencies in your business name only. Personal guarantees are OK, as long as the account only reports in your business name. If you give a PG, whatever you do, make sure you do not pay more than a week late or miss a payment. This will defeat the purpose of trying to build up your business credit profile.

Facts About Business

In the United Kingdom, a company can be formed by a single person, a group of people, specialized agents or by solicitors. Most companies today are registered via the Internet.

However, the process of business registration involves a lot of paperwork, where applicants need to collate a number of documents. Following this, entrepreneurs have to register their business with the Registrar of Companies for a standard fee of £20 and £50 for same day registration.

Interesting Facts about Business Registrations
Here is some essential information for entrepreneurs on business registration/s:

* Form 12 is a constitutional declaration stating that the information filed in support of an application for incorporation is genuine. This declaration allows trial under the Perjury Act for anyone making false statements.

* Any addition or subtraction of information in Form 10 will lead to the refilling of Form 12.

* The process of filling up Form 12 can be circumvented in the electronic method.

* Section 157 of the Companies Act 2006 was implemented on October 1, 2008. This created 16 years as the minimum age limit for being appointed as the director of a company.

* The subscriber or the agent has to sign the Memorandum of Association, the Articles of Association and the forms. The agent’s signature attests to the fact that they, as representatives, consent to the individuals appointed as directors.

* The Companies Act states that company officers have to mention their private home address. They are not allowed to present their corporate address or PO Box number unless the office address is validated by the Royal Mail.

* The Memorandum and the Articles of Association can be bought from a legal stationer or formation agent.

Role of Agents in Business Registrations
Hiring agents for the purpose of business registration is crucial because:

* Business formation or registration is a time-consuming and expensive process. It is especially so for the novices. Registration agents can relieve you of all the stress and hassles.

* An experienced agent can guide you in business formation – on starting and running a company, choosing the right structure, registering with a unique name.

Answers to Common Questions About Business Bankruptcy

The world of corporate bankruptcy law can be complex and intimidating. Don’t let confusion get in the way of making the best decisions for your company: read on to get answers to the most commonly asked corporate bankruptcy questions.

Q. What is bankruptcy?
A. When a business has financial liabilities that exceed their assets or is unable to meet financial obligations, that company is insolvent-unable to pay their creditors, the company must come to an agreement with their creditors regarding payment or file for bankruptcy protection. This judicial solution gives the courts the power to settle the company’s debts. Bankruptcy proceedings can be initiated by the debtor or by the creditor (called an involuntary bankruptcy). Filing a bankruptcy petition affects all of your creditors including:

  • Secured creditors (those with a lien on your property)
  • Unsecured creditors (vendors, credit card companies and others without a security interest in your property
  • Judgment creditors (creditors who have sued and obtained a judgment against the debtor prior to the bankruptcy filing)
  • Creditors with super priority claims (those with priority over other creditors because of special rules within the bankruptcy)
  • Creditors with administrative claims (creditors such as accountants or lawyers with priority because of their assistance in the bankruptcy filing)

Q. What does filing for bankruptcy mean for my business?
A. Filing a bankruptcy petition simply starts a legal proceeding, with no guarantees regarding the outcome. That is to say, the debtor will present evidence of its insolvency, but there is no guarantee that the court will declare them bankrupt. This statutory process gives creditors and other parties the opportunity to challenge the debtor’s allegations and object to the relief being sought by the debtor.

Filing for bankruptcy does immediately put into effect an “automatic stay,” an injunction that stops creditors from trying to collect their debts until the bankruptcy court rules. This stay is issued against all creditors upon filing a bankruptcy petition. The automatic stay is designed to give debtors temporary relief from their financial obligations, giving them the breathing room to figure out how to deal with their debts. If the courts declare your company bankrupt, then a settlement will be worked out with your creditors to satisfy all or part of your debts. Depending on the bankruptcy chapter you filed under, different rules apply.

Q. What is a business workout?
A. A business workout is a non-judicial resolution of your company’s financial obligations. Business workouts are settlements between a company and its creditors that satisfy the businesses’ debts, enabling it to continue operation. Also known as bankruptcy prevention, these arrangements are made outside of the court system.

While it may be surprising that creditors are willing to participate in business workouts, they’re more likely to receive greater compensation for their debts if your company does not file for bankruptcy. Using an alternative to corporate bankruptcy proceedings benefits creditors as well as the debtor, because some, or even most, of the debt will not be repaid under a bankruptcy proceeding. Secured debt, unsecured debt, and tax debts can all be resolved as a part of a workout. For additional information about business bankruptcies and your company, contact your area bankruptcy lawyers.