We all know personal credit is important but as a business owner have you thought about building business credit? A common mistake many new businesses make is conducting business under themselves as individuals instead of as a business entity. As a new business or even an existing business owner needs to understand that they need to establish their business as a stand-alone entity through incorporation (even if you’re the only one in the business). You need to let your business develop its own credit away from your own personal credit so if something happens to the business your personal credit is not in the line of fire.
There are some things you can do to help establish your business credit. After you register your business with the state (incorporation) you can call and obtain a Federal Tax Id number or EIN with the IRS. Once you have established your EIN you can apply for business lines of credit (do some research, you may find that there are some company’s that have special lines of credit offers and programs for new businesses). Once you establish the line of credit you can use it to make purchases but be sure to pay the bill in full every month. This will help your business develop a record of financial responsibility. Also with your EIN you can use it to establish your utilities such as your electric, phone services, a business banking account, etc. as opposed to using your personal information which also is important to building your business credit.
Another way to assist in developing your business credit is to register your business with Dun & Bradstreet which is one of the widely used business credit reporting agencies. For more information click here.
