Business credit for me, are you kidding? No, we aren’t kidding!! Building business credit is essential to your company’s capacity to obtain financing. Don’t be afraid. Whether you run your business as a corporation or a limited liability company, it has the power to create a credit file that is separate from your personal credit history.
When a company (LLC, LLP, or corporation) is registered, it is regarded as a distinct legal entity with the capacity to engage in contracts. It is regarded as existing independently of you.
It’s crucial to realize that if you run a sole proprietorship, there is neither a legal nor a financial distinction between you and your company. If that’s the case, any credit or funding applications you make will only be related to you personally and appear on your own credit reports. Start establishing credit in your company’s name as the first step in keeping your personal and professional money separate.
Here are five easy strategies to swiftly build business credit.
1 – Choose the Right Business Structure
You must choose a business structure such as LLC, LLP, or corporation in order to give your company legal entity status. Keep in mind that sole proprietorships do not establish a distinct company organization. Check out the SBA’s Business Guide for more guidance on selecting the best structure for your business and registration.
The next step after creating your corporate entity is to register your company with the state and local government establishments. This particular stage depends on your organizational setup and the location of your company.
2 – Obtain a Federal Tax ID Number (EIN)
The IRS has tools that allow you to submit a free application for a federal tax ID. You will need to provide this nine-digit number when submitting company tax returns, creating a business bank account, requesting licenses and permits, and asking for business credit, among other things.
3 – Open a Business Bank Account
Open a business bank account for your firm as soon as you receive your federal tax ID. This is a necessary step in clearly separating your personal and company costs.
Your company’s ability to raise money is significantly influenced by your banking connections. Your company’s bank account not only acts as a bank reference on loan applications, but it also enables lenders to access crucial information for financing reviews.
4 – Establish Credit with Vendors/Suppliers Who File Credit Reports
Always choose vendors and suppliers who file credit reports with a business credit reporting agency. To establish business credit quickly, ask for net terms from suppliers and vendors. These purchases and payments are reported to business credit reporting bureaus as you make credit-based purchases of supplies, inventory, or other products.
This activity establishes your company’s credit profile and business credit report. Once your business has reported on multiple trade lines, a business credit rating (score) is created.
Establishing a variety of accounts with different forms of business credit, such as a business credit card or line of credit. Every connection you make also functions as a business reference that can be cited on upcoming loan applications.
5 – Monitor Your Business Credit Reports
It’s crucial to keep track of each of your business’s credit files because there are three main commercial credit reporting organizations. Each agency gathers data from different sources, so they can have different details about your business.
The good news is that you can easily update the essential details about your company with each of the business credit agencies. You should get in touch with the organization to request any updates if you see any information that is out-of-date or inaccurate.
You can qualify for more loans and credit lines with better interest rates and payback terms if your business has a strong credit history.
In-Depth Video Course to Improve Your Credit
If you want to improve your credit you can take a video course like Business Credit Blitz. This course was founded by Eric Miller and David Cohen both highly successful business credit consultants, investors, and seasoned entrepreneurs.
They created the Business Credit Blitz video course to help the beginner to intermediate business owners, entrepreneurs, and investors to successfully secure money to fund their businesses or to start investing in real estate and equities, just like they do.
When you sign-up for their course, you’ll be given access to the in-depth video lessons that cover pretty much everything related to building credit and funds to launch your business along with investing and business strategies they use to multiply their income. They will teach you how to not only secure capital, but also how to become successful entrepreneurs and investors.
Topics include:
* How to build business credit
* How to improve your personal credit
* How to leverage credit into real estate and stocks
* How to use credit to invest in profitable businesses
* How to scale your credit limits and your business growth
