Time is a critical factor in business, especially in the context of commercial finance, and it also has significant implications when considering the structure of a Limited Liability Company (LLC), your second identity. Now that we have covered naming your business and getting your EIN let’s break down the importance of time in business ( TIB ) and its relation to having an LLC to gain access to business equipment and working capital lending. Sometimes, it starts personally, and 1099’s mark the start of a sole proprietorship.

TIB and LLCs:

1. Formation Process: Establishing an LLC involves filing the necessary documents with the state authorities. The cost is approximately $150 and varies per state. The time it takes to form an LLC can vary from state to state, affecting when the business becomes legally operational. Get on the clock as quickly as possible as you plan for the future. This essential investment can be made on your Secretary of State or State’s Division of Corporations website. National and state-specific websites allow you to file for an LLC (Limited Liability Company). Each state in the United States has its filing requirements and processes. To find the official website for LLC filings in a specific state, you can search online using the state’s name and keywords like “LLC filing” or “business registration.” This should lead you to the appropriate state government website, where you can access the necessary forms and information to file for an LLC. Competitors domiciled or opened under a specific state’s jurisdiction can often be found on a state government website. The older the LLC, the better off you will be. To get commercial lending, you must have an LLC with TIB!

2. Business Operations: Once an LLC is formed, its structure allows for more efficient decision-making and operation. This can save decision-making time compared to more complex structures like corporations. Some laws may govern the number of employees to remain eligible; however, AI & SaaS make it possible to find workarounds.

3. Contractual Agreements: In commercial finance, an LLC’s existence as a separate legal entity allows it to enter into contracts, borrow money, and engage in financial transactions. This distinct legal status can expedite financial negotiations and transactions.

4. Financing and Liability: An LLC’s limited liability feature can help secure financing more quickly. Lenders might be more willing to provide funds if the business owner’s personal assets are protected from business liabilities, reducing the time and effort spent on risk assessment. Those with ageing LLCs, 3- months of business bank statements and two years of tax returns may get commercial financing.

5. Ownership Changes: LLCs offer more flexibility regarding ownership changes. Admitting new members or transferring ownership shares can be streamlined, allowing quicker decisions and adjustments in ownership structure.

6. Tax Efficiency: LLCs can be structured differently for tax purposes, potentially reducing the time spent on complex tax planning that might be required with other business structures.

7. Business Address: A UPS Store post office box is a perfect substitute for an office address. $250 per year. They offer a complete street address if you don’t want to use your home.

Importance of (TIB) in Commercial Finance:

1. Interest and Costs: TIB affects the interest and costs associated with commercial financing. The longer it takes to secure the funding, the more interest payments and related expenses (like loan origination fees) can accumulate, potentially impacting the project’s overall profitability.

2. Opportunity Cost: The time taken to secure financing can impact the opportunity cost of not pursuing other potentially profitable ventures. If a business spends too much time seeking funding, it might miss out on time-sensitive opportunities in the market.

3. Cash Flow: Quick access to financing is essential for maintaining healthy cash flow. Delays in securing funding can lead to liquidity issues, affecting a business’s ability to meet its operational expenses.

4. Project Timelines: In cases where businesses seek financing for specific projects (such as expansion or product development), delays in funding can lead to extended project timelines, potentially impacting market positioning and competitiveness.

5. Market Dynamics: The dynamic business landscape and market conditions can change rapidly. A delay in financing might mean missing out on favourable market conditions or facing unfavourable conditions when funds are finally secured.

In summary, time is of the essence in commercial finance due to its impact on costs, opportunities, and operational efficiency. The choice of business structure, such as an LLC, can influence how efficiently a business can navigate the financial landscape, make decisions, secure financing, and adapt to changing market conditions. You can open a business bank account with an EIN and LLC Formation!

Commercial Finance Now does not provide tax, legal or accounting advice. This post has been drafted for informational purposes only and is not intended to deliver. It should not be relied on for tax, legal, or accounting advice.