Allow me to introduce myself; I’m the XBanker – a business-financing insider, shedding some light on the murky world of small business lending and business credit. This is the first post in a 4 part series focusing on business strategies for Real Estate Professionals.

Tom Peters’ article in Fast Company several years ago: The Brand Called You, had a drastic impact on my life and career. I quit looking at myself as an employee and instead as an independent business and brand. I highly recommend this article to everyone, regardless of career. Since branding isn’t my bag – I’m not going to pretend that it is by discussing it here.

If you invoice for your services or receive a 1099 from an “employer” – chances are that you pay too much in taxes, unduly burden your personal credit and are missing out on a huge opportunity to access cash and credit for growing your business.

Last year I invited a handful of listing agents into my home to win my business. Each conversation turned to the very topics that I’m going to address in this series. One of the agents in particular was walking the razor’s edge. His family-run real estate team was making close to $1m/year in commissions. This was on top of a number of income-generating investment properties. After 15 years in business, this professional was still operating as a Sole Proprietor. Not only was he paying way too much of his income in taxes, he was literally a car accident away from losing everything. If that wasn’t enough, he needed float to cover his team in a slowdown and reserves to jump on investment opportunities – without drawing upon the equity in his home. My advice for him is the same that I extend to you.

The first thing that you need to do is to incorporate. I’ll keep this really simple: form an S Corporation. My simple rule is: corporations for business activities, LLCs for holding assets (such as real estate); if you have a business partners that you aren’t married or related to, form an LLC for your business (but still form an S Corporation for your interest and income). Your tax advisor should be able to adequately address the advantages of these structures. I’ll address tax benefits in my next post, but please keep in mind that tax savings is just one component of what I’m addressing; obtaining capital is my primary focus.

Forming a corporation is the first step of separating you from your business activities. Once the separation is complete, you can build a credit profile for the business and begin to obtain business loans and lines of credit. I’ll provide some tactical strategies for optimal positioning for your corporation to obtain financing. In my next post, I’ll focus on the tax benefits of creating this separation.