How to Establish and Build Good Credit for Your Business
In this day and age, good credit is incredibly important. For small, medium and large-sized businesses, good credit is vital. In order to¬†establish business credit, you need to make sure that you follow a few simple steps. One of the most important things, though, is to understand the importance of extricating your personal finances from your business finances. Even if you have a low personal credit score, you can still establish a clean credit record for your business, especially if you have a new business. Here is how to establish and build good credit for your business.
First and foremost, you need to establish your business before you can establish credit. This requires a lot of paperwork – and some legwork – but it will be well worth it. For one thing, you will need to register as an LLC, or limited liability corporation. Incorporating your business is simply a means to legally separate your business from your personal finances. If they aren’t separated, your personal credit may taint your business credit. On top of incorporating, you will need to set up an EIN, or employer identification number. You can set up an EIN with the IRS.
After you have your LLC set up and your EIN number in place, you can officially open a bank account. Having a bank account is critical as a business, because you certainly don’t want to mix your personal accounts with your business accounts. When it comes to setting up a business bank account, you may also want to set up an account for taxes and an account for payroll. Setting up a bank account will also help you acquire a business credit card, which will be an essential tool in developing credit and a good credit score.
Indeed, a credit card is an important tool to use when it comes to building credit – perhaps the most important tool. If you have a small business, there are many credit card companies, and even banks, that will offer a¬†small business credit card¬†to a new or startup business. If you are a large business, you may want a card with a bigger spending limit. All in all, though, you want to be frugal when it comes to using your credit card because you want to use it for only the basics and necessary purchases. For instance, if you have a PO form and need supplies, you can use your credit card to complete the order. It is important, though, to pay your bill at the end of the month. Each time you pay your credit card bill at the end of the month, you will be building credit and improving your score.
In the end, establishing and building good credit for your business is all about registering and incorporating your business. Also, you want to make sure you set up a legitimate bank account in your business’ name. Once you have those two steps out of the way, you can apply for a credit card. In the end, with some responsibility and forethought, building credit will be easy.¬†To know more stuff like this please visit sites¬†Investingtalks.com¬†and¬†Essaystock.com.