This weekend, fiance cleaned out his business checking. He spent 3K and bought about a third of the equipment he needs to leave his job. The rest we are going to have to borrow on a business credit card. It's the start of a long, scary process of buying some expensive stuff!
I posted before that he hadn't applied for a business credit card yet because his December FICO was a hair under 700. Well, WAMU finally got around to updating the FICOs on the credit card and his FICO was up to almost 750! So, the application went in yesterday.
We're going to have a very cash-poor business for a while. I'm not sure exactly how to put this in the net worth. Before, I never counted his business account because it was always going to be reinvested in the business. When the business actually starts making money, I guess the business checking should go in the net worth. The business debt will certainly need to go in the net worth.
2 comments:
I think this is a really tough consideration. It's easy to mix your income and debt with the business (especially since it's a one man shop right now). Personnally, I'd want them as separate as possible even if the two of you are on the hook for it all. From a Net Worth consideration I'd look at the money put into the business as a loan to be paid back. Income could come as pay or dividends. I'm guessing the business is such that without the spouse, there are no real business assets, so something like the above would likely work in the short run. I don't know, just a thought. Good luck with the start-up
Big step! Congratulations. It's scary to go into debt for business but many times necessary. The buying part is fun but -- as you know all too well -- it's the pay-off that's the big old pain in a rear.
As someone who spent years paying off his first business venture -- boot strap, boot strap boot strap. When in doubt don't spend any cash you don't have to.
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