How to Build Business Credit
Business credit is very important for any and every business. It will help build your business's image, and it will help when you are working with other businesses.
You may need pamphlets and brochures created, so by going to an advertising or printing company, the higher your business credit, the higher credit they will allow you.
You want to conserve cash flow, keep track of expenses, and protect your assets. These are all very important and essential elements in keeping a successful business intact and running.
Finding a credit institution, such as a bank business credit card will help your establish you business credit.
In order to build good report and good credit, it may take some time, but to get started following the next few tips and suggestions and you should be on your way to building good business credit in no time.
Note: If you want to keep your personal credit and your business credit separate, you may have to structure the business as a Corporation or a Limited Liability Corporation, LLC, or consider purchasing an older corporation that has little to no business activity. Check with the business or government office in your area.
First, you're going to need to apply for an EIN number. In order to gain any business credit an employer identification number (EIN) is a must. All you have to do is go to the IRS website and apply for an EIN. Just following the directions on the website; they should be pretty simple.
Next, make sure to apply for any business license, permit, and registration, that you need in order to do business in your area; you don't want to get in trouble or find yourself in court because you didn't follow all the rules, just some of them.
And, then you want to open a business bank account, separate from your personal account. Make sure that the bank account is not under your name, but of the official business name.
Increase Business Credit
Now, once you have your EIN and your business license, you are ready to establish your business credit.
You may want to start simple by applying to places like Staples, Office Depot, and Office Max. You'll want to fax in a business phone bill or some other bill with your business name on it. It may be best to copy the bill on business letterhead.
Just like a personal credit card, make sure that you pay off the balance before your payment dead and before the grace period is up.
You may want to apply for other business credit cards, which is fine. Just remember not to apply to everywhere at once. Spread it out a little. You don't want your credit flagged.
When applying for business credit cards, the same basic rules as your personal credit card applies.
Establish a DUNS number
Next, you may want to establish a profile with Dun and Bradstreet in order to obtain a DUNS number. This is the largest tracker of business credit. It will be the best way for you to monitor your credit as you business grows.
The DUNS number is free of charge. You can apply at the DNB website, and you should have you 9- digit number within a month or two.
Note: The information that you give Dun and Bradstreet is permanent, so make is as accurate as possible.
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