Often times, new investors make the mistake of interlacing their personal finances with their business endeavors. BIG MISTAKE! According to the Small Business Association, 95% of businesses fail within the first 5 years. Why risk personal financial loss on some bad business ventures? Remember: Never put yourself in a position where the potential failure of your business jeopardizes the well-being of your personal life!

So some of you may be thinking, “How can I separate the two?”

Good question.

One word: Incorporate.

When you incorporate, you’re creating an entity with a brand new “identity”. In other words, this creates limited liability for you, the owner, as all business would be conducted under the name of your corporation. The process of incorporating is fairly fast and simple. Of course, you can do this yourself, but I suggest websites, such as rocketlawyer.com and legalzoom.com, where you can pay a relatively “small” fee to have a company do it for you. The time frame is dependent on which state you’re located, but usually ranges between 1-8 weeks.

After you incorporate, it’s important that you obtain what is known as an EIN (Employer Identification Number), which serves at your corporation’s “social security number”. It’s a nine digit number that allows you to apply for business credit, open bank accounts, and etc. just as you would with your own social security number. The giving of EIN’s is done through the IRS (internal revenue service), either online (www.irs.gov) or over the phone, and takes a couple of weeks to be completed. Once receiving your EIN, I strongly suggest you open a business bank account, as many financial institutions determine the age of your corporation not by the filing of your corporate documents, but by when you first opened a bank account.

Now that you have your corporation and EIN, you’re ready to build your corporate credit (discussed in a later article) in order to completely separate your personal and business expenses. Remember, be smart! The key to being a successful investor is the use of OPM (other people’s money)! It’s valuable information in knowing how to make that money available to you. In some instances, it begins with incorporating!

M.J. Glover is the Chief Operating Officer and co-owner of Blackstone Acquisitions and Management LLC, an Arkansas based corporation. When he’s not working on a new investment project, he can be found coaching fellow investors on how to acquire commercial properties and capitalize on their financial opportunities. His knowledge of real estate and finance has helped countless novice investors achieve their real estate investing ambitions.

Company website: http://www.blackstonecommercialinvestors.com