Entrepreneurship and personal credit

Question: Can entrepreneurship ruin your personal credit?

Answer:  Yes it can. However, there are steps you can take so you don't lose your personal assets. 

Most entrepreneurs didn't go to Business School to learn how to run a business before starting out. Take myself for example, I was actually finishing my Bachelor's Degree in Business while starting a new business. People saw the "magic" my husband and I were doing academically with our children and they wanted in. The exact words were: "Get the building, I'll get the people." We did just that! We established an LLC,got an EIN, found a building, rented office equipment, got business accounts and other things we thought were right! 

We thought we were doing everything right. WRONG!

We set up an LLC but were still using our own social security numbers for business purposes.

X We were still using personal credit cards for business purposes.   

Using your own social security number for business purposes is not the best decision. Your business should have its' own social security number, an EIN. If you're looking to establish business credit, you have to use your EIN and not social security number. It doesn't matter if it's a NET30 with DHL, use your EIN! 

Think about this for a moment, you use your personal credit cards to get started in your business and pay for everything from your domain names, postage, inventory, office space, office equipment and supplies. However, your business isn't taking off as quickly as you thought it would and little to no money is coming in. Where does that leave your personal credit? You have maxed out your credit card and took out personal loans. 

Try to avoid the strain on your personal credit and build business credit by:

  • Establish an EIN for your business (use it instead of your SSN)
  • Use a separate business banking account
  • Don't use your business account to pay for personal expenses. 
  • Pay yourself from your business account
  • Open a business credit card and use it wisely (you may have to be personal guarantor) 
  • Use business to business accounts/trade accounts
  • Get familiar with Dun and Bradstreet

This may seem intimidating but it's really not. Do some research and reach out to a professional for better understanding. 


Keep working, 

Angela Patton


I do not claim to be a tax consultant or business financial advisor. I suggest that before starting your business, you consult with a tax professional. The above statements are solely based on my experience and research. 



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