Andy and Allen decide to open a food truck in Parkview Beach that sells gourmet tacos. Andy buys the truck on his credit, while Allen uses his personal credit cards to buy the preparation equipment. They buy their food distribution licenses using their savings, as well as, supplies they need to begin their business. They’ve already had their food tested out and really believe that they will get a lot of customers if they park their truck in the right location. The first weekend they intend to open the truck, an unexpected hurricane hits and people decide to stay indoors that weekend. At first this doesn’t bother them because they can freeze most of the food and just buy a few extra supplies the following weekend.
The next weekend they go to park their food truck near the beach and cannot find a spot. They end up having to park on a side street where they only make a few dollars. This is not nearly enough to cover the cost of what they’d spent, but they are determined to continue. The following weekend they get up even earlier but the result is the same. They review their plans and find another spot that they hope will see a lot of traffic for the third weekend.
By the time weekend number three rolls around they show up in a new location, and while the business traffic is not bad they end up not making enough to cover the first payment on the vehicle on time. Andy’s credit will now take a slight hit and his wife is pretty angry.
This is not an uncommon scenario. What would make this entirely different would be if they had chosen to go the LLC route, even on a site like BizFilings, and made their purchases using a business card. The debt would be associated with the business instead. Andy’s personal credit would be fine, his wife would be happy, and instead of facing the anxiety of how their delay in getting off the ground affects their families they could continue to revise their tactics and keep the business moving.
LLCs limit the personal liability of those involved, making them the incorporation type most often recommended to small business owners.