Article Tags : building business credit . business credit . business credit score . business money . good business credit
In the beginning stages of starting your own business, you may be eager to learn how you can build a credit score for your business. Building credit for your business instead of allowing it to simply tack onto your personal score is essential for conserving cash flow, keeping accurate track of business expenditures, and protecting your personal credit score. Regardless of what your personal credit score is, you can build an ideal score for your business by using the six stages of building business credit to get you started.
Step 1. Figure out a business structure.
If you want your business credit to be separate from your personal credit right at the beginning of starting your own business, you will need to structure your business as an LLC or a Corporation. You can also buy a “shelf” corporation, which is one that is created to be used at a later date and currently has no activity. There are companies that can sell you a shelf corporation.
Step 2. Obtain an EIN, or employee identification number.
This can be done through the IRS online where a simple application takes about five minutes to complete. Your business credit is tracked using three things: your business name, business address, and EIN.
Step 3. Open a separate bank account.
Open the account under the exact legal name of the business. With as little as a $100 deposit, you can open your business checking account.
Step 4. Get your business established.
When starting your own business, you will need to be listed in the 411 directory, obtain a business license, permit, registration, etc. Accomplish this within the jurisdiction where you do business.
Step 5. Establish a Dun and Bradstreet (DNB) profile and obtain a D-U-N-S Number.
DNB tracks business credit. There is no charge to receive your D-U-N-S Number, and it takes about 30 days to receive. You can choose to pay for a credit building service, but be sure to complete the necessary preparation.
Apply for business credit. As you are starting your own business and it begins to establish credit, you must be careful to pay invoices in full within the grace period. The Paydex scale is from 0 to 100, and a score of 80 is considered to be very good. This number is based on your payment history with five or more vendors. Unlike personal credit, every day earlier than the deadline you pay your invoice will make a difference in your score. Please visit stepsto.com for more great business advice.