Hi everyone:

I have a question about something I found out the other day. Do any of you know anything about turning your home business into a corporation or LLC? Do I need to do this in order to get support and business loans? Or is having my EIN enough? I'd appreciate any feedback on this. Thanks.

MY FRIENDS IN RACINE, WI DID THIS. THEY DID IT WITH THEIR INSURANCE COMPANY. THEN THEY HAD TO GET A NEW LICENSE. YOU SHOULD HAVE A TAX ID NUMBER. I HAVE ONE.

You don't need to be incorporated to get business loans. Like anything - there are good points and bad points. Many large and mid-sized business do this because it reduces liability and loss of personal assets if the business does not do well. The draw back for smaller businesses (and home providers) is that you will end up paying more taxes (you would have to file a tax return for the corporation then take any earnings you have from that and claim it as income in your personal taxes).

Okay. Thanks for the advice. Do you know how a family child care can get a business loan without using their personal credit if there is such a thing? For instance, I have an EIN. What can I do with that?

The main thing is that you can use your EIN in place of your social security number when parents are wanting to claim a child care credit. To get a loan, the first thing any lender will ask for is a business plan. The business plan will show the lender what you have now (assets), what your business potential is (projected profit), and whether you can affort to pay back the loan (budget). Contact your local SBA (small business association) - they often offer free workshops on writing business plans and can help suggest lenders in your area.

Okay. Thank you.