5 Important Steps to Establish Business Credit
There are numerous things to take care of when you start a new business. One of them should absolutely be establishing a line of business credit. This is separate from your personal credit score, so start taking actions before you even open for business. A good credit rating will help tremendously with acquiring loans and doing business with other organizations.
5 Steps to Establishing Business Credit
Open a Bank Account for the Company
You want to make sure you have a bank account set up specifically for your company. Try not to mix your personal transactions with your corporate ones. You should also acquire a company credit card at the beginning. Make all purchases for the company with this card. This will help a lot when tax season comes around.
Incorporate Your Business
Setting up your business credit line also involves establishing your company as a corporation rather than a sole proprietor. This is the simplest way to ensure your personal finances are viewed separately from all purchases made on behalf of your company.
Formalize All Business Details
Another aspect of separating your personal dealings with your business ones. This includes tiny details, such as setting up a separate mailing address for your company. Even if you do not have a physical building yet, you can establish a P.O. Box where all company mail should go to. You also want to create a separate corporate phone number that is different from your personal cell number.
Create Credit Lines With Suppliers
When you are first starting out, you should work towards securing five suppliers. These should be companies that supply you with inventory or the raw materials you need to conduct business. When you are establishing these communications, you should ask if the supplier reports to the main credit bureaus. If you pay your suppliers on time, then you will do a lot of good for building up good credit.
Pay All Bills on Time
In addition to paying off your suppliers, you should pay all of your bills on time every month. This includes bills from utility companies. Making delayed payments will only hurt your score, similarly to what happens if you are late on paying utilities personally at your house.
Summary
There is a lot to take care of when starting a business, so establishing business credit is sometimes the further thing on an entrepreneur’s mind. However, you want to get started on the right foot by pursuing a productive course of action immediately. If you are interested in learning more about business credit please click here and speak with a pro.
