Business credit is a company’s ability to buy something now and pay for it later. By establishing a good business credit rating, you may make it easier to borrow money when your company needs it.
Depending upon where your business is located, you’ll likely have to register with your Secretary of State. In many states, this is part of the incorporation process you will complete when you set up your LLC or corporation. Nonetheless, it’s a good idea to double-check with your Secretary of State to confirm you’ve completed all of the necessary business registration requirements.
An EIN is like a Social Security Number for your company. You’ll use it to identify your business when you pay taxes to the IRS. An EIN is also important when you fill out applications for business financing, like business credit cards and loans, and when you open a bank account in your company’s name.
Having a separate business bank account can make your company seem more credible in the eyes of lenders. The health of a business is frequently measured by reviewing the cash flow in and out of its business bank account. A business bank account can also help you keep your corporate and personal finances separate – avoiding accounting issues and challenges at tax time.
You don’t have to sign up for expensive phone service if your business doesn’t need it. However, getting a dedicated phone number for your company is a must if you want to appear credible to lenders and service providers (not to mention your customers). Remember to get your business phone number listed in your local directory as well.
Establish your business as a separate legal entity.
When you form a separate legal entity for your company (like an LLC or corporation) it can make it easier to create a business credit file and, eventually, qualify for business financing. It may also provide tax advantages and could protect you from some of the personal liability you might face as a sole proprietor.
When you first learn about business credit, it may seem like you have a long way to go. But 45% of business owners don’t even know they have a business credit score. By educating yourself about business credit, you might already be miles ahead of the competition. Need additional help? Want to build your business credit