Any Small Business Owners Out There? Advice Appreciated

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Since it'll be on your tax return as a Schedule C and since you won't be incorporating the business yet I don't see why they wouldn't do either of them (business versus personal). The hassle over 3k is weird and you would think they would know how to handle this situation.

Schedule C?

Google, here I come.

Is this the type of 1099 I'll be receiving or the one I'll be filing next year when/if I buy this business?

EDIT: Ok, it's the one I'll fill out next year. Thanks Google. Oh, and you!

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

If I were you, I'd incorporate immediately. If the business goes under and you don't, creditors can and will come after your personal assets. I don't think there is any downside to incorporating, and there are ways to do it on the cheap.

Mind if I ask what kind of business you're getting into?

My boss also told me that if I incorporate and play my cards right, an s-corp will be cheaper come tax season. As a sole proprietor, my income will be shown to be much higher and I'd pay about 10x the amount when all was said and done (according to him). I think this is based on an s-corps eligible write-offs but I really don't know.

Perhaps if this goes through, my accountant will get a visit in the very near future. Sounds like the smart thing to do now that you guys are sharing your opinions. I don't want to lose my shirt here.

[Redacted01]

Re: Any Small Business Owners Out There? Advice Appreciated

If you know of ways to do it cheaply, please let me know.

Don't be cheap when it is your livelihood on the line. A few hundred extra now is a lot cheaper than losing everything later over something dumb.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Welp. Still nothing.

Just called my credit union and my application hasn't even been assigned to anybody in personal loans yet.

I was told I'd get a call back in the morning and it's almost noon. AKA banker lunch time. And I called THEM.

Ahh, the waiting game. You'd think they'd be eager to take my money/interest...

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Just heard back.

Even with an A+ credit score, my credit union is going to make me jump through a hundred hoops to make this happen.

1. I'll need to put my car up for collateral. It's an 01' Honda Civic in pretty rough cosmetic shape that she NADA'd for around $4800. Yeah right. If they need to visually inspect it, it'll be worth half that (which I told her and she still gave me that amount).

2. I'll need to pay off a Kay Jewelers bill. I literally have one and a half payments to go. But nope, if it's open, it needs to be closed.

3. My mother needs to co-sign (I expected this).

4. It seems that if my mother did take this loan out for me on her own, she couldn't give it to me (the loan's intended purpose. I need to verify this one but I think that's what the financial person said when I asked).

5. My being paid in cash (though ok with my bosses accountant. I asked!) had this woman furious even though we're tracking it as the CPA advised.

6. My bosses accountant is going to have to come up with a business letterhead and type out my last four weeks of pay along with my hire date (expected, but see number 5. I now fully regret ever becoming an independent contractor).

7. I'll need to add full coverage to my car insurance with a $500 deductible. Yeah, on an 01 civic with 139,000 miles.

I'm beginning to lose all hope here and feel blindsided and deflated.

[Fresh Tendrils]

Re: Any Small Business Owners Out There? Advice Appreciated

I would just go to another bank at this point. Way too many hoops for $3,000.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

I would just go to another bank at this point. Way too many hoops for $3,000.

I said that.

Her response, "I'd expect you'll need to do these things regardless of which financial institution you apply to, in my experience."

I just feel so flustered that I don't even know which bank to turn to. Maybe it's a credit union thing here, I don't know? Or maybe I'm just not a good candidate for a loan. A+ rating or otherwise (it's A+. She checked).

Once I calm down, maybe I'll hit the phones.

Thanks for the support guys.

[ImTellinTim]

Re: Any Small Business Owners Out There? Advice Appreciated

Other banks absolutely will not make you jump through all those hoops. Shop around and see what kind of rates you can get.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

LOL!

My mom just called me and agreed with you guys. "Try another bank."

My fiancé just called and said, "They're all gonna do that."

Jeez. Thanks for the kick in the teeth babe.

My brother is getting married tomorrow so I'll pick this up on Friday. It'll give me a few days to think as well. My brain is running marathons around me right now (is the business worth it? What about this year's taxes? What if the dog gets sick? Etc).

[cardsfan2222]

Re: Any Small Business Owners Out There? Advice Appreciated

It never hurts to check out other banks. $3,000 is nothing to most banks, so there's no reason they should need a co-signor and your car as collateral.

[Redacted01]

Re: Any Small Business Owners Out There? Advice Appreciated

As someone that works in banking, I'm going to learn towards most are going to make you do something like that. Maybe not a laundry list, but just because you have a good credit score doesn't mean they will just throw money at you. You already have an outstanding loan so people aren't going to be eager to just hand out a second to someone with such a small history.

Any bank is going to want collateral. Since you don't own anything other than your car... and if it is collateral, they want it insured. Else, you get in an accident and they don't have a way to recoup their money. They want to see if you are making money. They aren't going to give a loan to someone with no income. Maybe since I'm in the industry, these things seem clear to me I guess, but you will have to do most of them.

Sounds like you might need a better co-signor. If your mom's history isn't good enough, it's why they might still want collateral, but at $3000+, I think they are going to want something still. If you don't think you'd have a problem paying it, just go with it.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

Well, I think the issue is stemming from a $2700 balance on my existing personal loan. Of course, I pay it religiously (I took it out to keep my credit score in immaculate shape, which it did).

So I guess adding $3000-$4000 to that, plus my less than stellar income (30% of sales, commission), and this is where the hangup appears. But this is also why I knew I'd need a co-signer.

And her credit is phenomenal too.

Bad times. The fiancé is laying in to me too (honestly, I think she's jealous my brother...my twin...is getting married first). But I digress.

I'll step up to the plate again in a couple days. Definitely not going through with this current offer though. It makes no sense to carry full coverage on a 13 year old car.

[Heroesandvillains]

Re: Any Small Business Owners Out There? Advice Appreciated

As someone that works in banking, I'm going to learn towards most are going to make you do something like that. Maybe not a laundry list, but just because you have a good credit score doesn't mean they will just throw money at you. You already have an outstanding loan so people aren't going to be eager to just hand out a second to someone with such a small history.

Any bank is going to want collateral. Since you don't own anything other than your car... and if it is collateral, they want it insured. Else, you get in an accident and they don't have a way to recoup their money. They want to see if you are making money. They aren't going to give a loan to someone with no income. Maybe since I'm in the industry, these things seem clear to me I guess, but you will have to do most of them.

Sounds like you might need a better co-signor. If your mom's history isn't good enough, it's why they might still want collateral, but at $3000+, I think they are going to want something still. If you don't think you'd have a problem paying it, just go with it.

Thank you. I really tend to agree with you now that I hear your side out.

But my mother's income is good and her credit is impeccable. This is why I asked if all this was necessary (the car part) since MY MOM is my collateral.

Does that make sense? Shouldn't her backing me remove the car factor?

[ImTellinTim]

Re: Any Small Business Owners Out There? Advice Appreciated

Oh, I didn't understand from your earlier post that the loan you were talking about still had that much on it. I thought you were just going in to get $3,000 without anything else other than that Kay Jewlers thing out there.

[Redacted01]

Re: Any Small Business Owners Out There? Advice Appreciated

Thank you. I really tend to agree with you now that I hear your side out.

But my mother's income is good and her credit is impeccable. This is why I asked if all this was necessary (the car part) since MY MOM is my collateral.

Does that make sense? Shouldn't her backing me remove the car factor?

Definitely talk to other banks, but it's a safety net. They have 2 ways to get their money back if your payments to fall through. I doubt all would require it, but it would not surprise me if other banks want collateral in addition to a co-signer.

Credit unions are usually pretty good at working with people, but a major bank may be able to help. The problem you have is that you are getting a personal loan. Completely understandable because of the convenience. They are just going to be pickier than if it was a business loan where there is the potential gain from an investment. Can't hurt to talk to another bank about it and maybe they can help out or offer another approach.