Thinking of starting my own company

[Anonymous]

Hi everyone,

I've been working with the same amazing company for about 10 years. I've worked my way up the payroll, and I am currently the companys VP of Human Resources. When I was in college, I got my MBA, and I also have a bachelors degree in accounting.

I currently make about $142,000 a year from my company, and I have a full benefits package. I hold one of the highest positions in the company, under the CFO, CEO, and the President. My current position is the highest point in my career that I will ever get. I'm only 34! I don't want to be doing the same exact job for another 30 years! I've been looking around at different careers, and they are all the same. Who would have thought that a Vice President was a dead end job!?!

I graduated college at the top of my class, and I love accounting. I want to start up my own accounting firm. The company that I currently work for, said that they would be my first client if I were to do so.

So, I contacted a lawyer and such, and they said that I will have to go a while without a paycheck, and that it will cost a hefty amount of money to start up the company. (about $250,000). My wife is supporting me with the idea of it, but I'm worried that it will affect my credit. I have perfect credit, I've never missed any payments on anything.

I always pay my bills on time, and I am very smart with saving my money. To cover the start up costs, I would have to get a $150,000 business loan, and I would also cash out $100,000 from my investment portfolio. I have enough money to go without a paycheck for about a year, and I have $1,200/month in rental income from my rental property, so that will help with expenses. 

My question is this: 

Will getting a $150,000 business loan for a new business affect my credit? If so, how will it be affected?

[llecs]

I recommend re-evaluating those start-up costs. I've started various businesses over the years and accounting was one of them. My focus was on corporate customers, as well as non-profits. I'm a college drop out twice over and don't have an accounting degree, so I couldn't call myself an accountant, but did do everything but file the tax docs and let them do that on their own after preparing it for them. There are also tight regulations in my state for accountants.

It won't cost $250k to get started. With the proper certifications, computer(s), biz license, state registration or state licensing, insurance, a small office, marketing, office supplies, software, association dues, legal, and extra cash for the CEUs you'll be taking, you shouldn't have to fork out more than $20k-$25k in start up costs. I got mine up and going for $5k and that turned a gross income of $120k or so the first year, and I was content with that. I maintained that for about 3 years before finding greener pastures.

Per FICO, if you added any loan, your score will drop, regardless of dollar amount....based on your posted profile. ETA...any drop will be short-lived to a year or even less.

[PapasWifey]

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@Anonymous wrote:

Hi everyone,

I've been working with the same amazing company for about 10 years. I've worked my way up the payroll, and I am currently the companys VP of Human Resources. When I was in college, I got my MBA, and I also have a bachelors degree in accounting.

I currently make about $142,000 a year from my company, and I have a full benefits package. I hold one of the highest positions in the company, under the CFO, CEO, and the President. My current position is the highest point in my career that I will ever get. I'm only 34! I don't want to be doing the same exact job for another 30 years! I've been looking around at different careers, and they are all the same. Who would have thought that a Vice President was a dead end job!?!

I graduated college at the top of my class, and I love accounting. I want to start up my own accounting firm. The company that I currently work for, said that they would be my first client if I were to do so.

So, I contacted a lawyer and such, and they said that I will have to go a while without a paycheck, and that it will cost a hefty amount of money to start up the company. (about $250,000). My wife is supporting me with the idea of it, but I'm worried that it will affect my credit. I have perfect credit, I've never missed any payments on anything.

I always pay my bills on time, and I am very smart with saving my money. To cover the start up costs, I would have to get a $150,000 business loan, and I would also cash out $100,000 from my investment portfolio. I have enough money to go without a paycheck for about a year, and I have $1,200/month in rental income from my rental property, so that will help with expenses. 

My question is this: 

Will getting a $150,000 business loan for a new business affect my credit? If so, how will it be affected?

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Wow, at 34 that sounds great to me! I'm hoping to be in a good financial position like that when I'm 34... although that will be the year that I hopefully finish my Ph.D. so I don't know if I'll have a well-paying job at that time, but I hope so lol.

In any event, I can not answer the question that you posed but I wanted to respond.  How long did the lawyer expect that the $250K would last (was it just initial startup, or a year and a half or two of expenses)? 

Would the purpose of taking out the business loan be to help your business credit picture, or to help offset the amount that you have to come out of pocket with? If it's the second option, I would think that the $100K that you have to contribute should be quite sufficient for startup costs (although I've never started an accounting firm, so I could be off base lol).  Also, would it be possible for you to start your business while you continue to work in your VP job (even part time)? If so that will allow you to sock away some additional income that could be used to offset some of the costs for your new business (or added to your savings so that you could go even beyond a year, if need be without a paycheck).

Whatever you decide, best wishes in your solo venture!