I am seeking to start a business service S-corp through self financing. This business should require low startup costs and low OH and operating cash. I have good and ample personal credit, but no cash on hand to start the business. Friends-and-family financing is out of the question.

Is there a way I can legally (from business and personal pov) finance this start-up using personal credit without being personally liable? For example, could a business accept all liability (including default) for a personal credit card used solely for business activity?

Does it matter whether the transfer of liability occurs before or after the actual transactions?

I have read many of the valuable threads in this and other fora and am quite clear regarding reimbursement for business expenses and arcadhia gave a quite good account of the steps and time factors involved in establishing business credit (http://www.small-business-forum.com/...ead.php?t=6402).

Thanks for the great information, all!

As a new S-Corporation without an established credit history, credit card issuers will look at your personal credit to determine credit-worthiness. Many credit card issuers will also require that you be personally liable for the debts in the event the business is unable to pay back the outstanding credit. If they didn't have this in place, it would be so easy for people to form a company, apply for credit, run the bills through the roof and then just run the business into the ground. Credit card companies would have no recourse.

Until your business has an established credit history, look to be personally liable for the debts if the business fails -- regardless of whether the credit card is a personal or business card.

Also, if you use your personal credit card for business transactions -- as far as they are concerned you are PERSONALLY liable for it, not a company which you're funding that went through. They want their money back (with interest).

Another option too if you're looking to get financing [though this would affect your personal credit, not business] is to try a website such as Prosper.com. If your state allows, you can request a loan which is funded by lenders (other individuals). Sometimes loans will receive no bids (aka funding) and you get nothing, or very few bids with little money. If you think you may default on this (for some reason) -- you'd be personally liable as well.

Good luck with your business, regardless of which way you go about financing it.

I guess my best bet for the business will be to use personal financing for the business after formation of the business (no start-up amort.) and treat this as a loan and deduct the interest??

Otherwise, this would be just an at-risk investment of capital.

Are there other options which may be better for the firm? Comments?