• Home
  • Meet Sylvia
    • Sylvia In The Media
    • Empower Yourself
  • Work with Sylvia
    • How To Launch A Small Business
    • Business Growth Strategies
    • Group Coaching
    • VIP Day
    • Loan Packaging
    • Website Design
  • Speaking
  • Write For Us
    • Author Interview Submission
    • Webinar Facilitators Submission
    • Business Woman Interview Submission
    • Submit Your Story
    • Welcome Contributor
  • Podcast
  • Store
    • Advertisement
  • Resources
  • Contact Us

Sylvia Browder's

Blog for Women Entrepreneurs

  • Community News
    • Events
    • Teleclasses
    • Relationship
    • Telling Her Story
    • Featured
  • Beauty
    • Hair care
    • Make up
    • Skin care
  • Financial Wealth
    • Wealth management
  • Health & Wellness
    • Fitness
    • Life Balance
    • Nutrition
    • Health News for Women
  • Spirituality
  • Entrepreneurship
    • Branding
    • business bartering
    • Business Growth
    • business leaders
    • Business planning
    • Business strategies
    • Buying or selling business
    • Business taxes
    • Certification
    • Customer service
    • Economic downturn
    • Human resources
    • Leadership
    • Legal
    • Life Balance
    • Management
    • Marketing strategy
    • Marketing & PR
    • Networking
    • SBA
    • Small business
    • Small business coach
    • Small Business Loan
    • Social Media
    • Startup
    • Strategic plan
    • Technology
    • Web 2.0
  • Business Women Interviews
    • 10 Most Intriguing Women
  • Women Authors
  • Reviews
    • Book Reviews
    • Product Reviews

8 Steps to Establish Small Business Credit

July 11, 2011 By Guest Blogger Leave a Comment

Share This:

Credit Score

Establishing business credit is an important step for any new small business and helps you to: (1) maintain a credit history separate from your personal credit history and experience the business benefits of having good business credit, and (2) demonstrate separation between owners and the business.

Why separate credit histories?

By having a business credit history separate from your personal one, you can minimize the effect negative events on one might have on the other. For example, if you have some financial missteps that impact your personal credit history and score, they shouldn’t impact your small business credit if you have established a clear separation and vice versa.

 

Why separate business and owners?

Unless you’re operating your small business as a sole proprietorship or general partnership, you need to demonstrate that the business is separate from the owners. One of the key benefits that corporations and limited liability companies (LLCs) provide the owners is protection of their personal assets. Keep this protection in place by consistently showing clear separation between the owners and the business.

Eight steps to establishing your business credit

  1. Incorporate your business. Even though you may be incorporated when you’re reading this, it deserves a mention. With sole proprietorships and general partnerships, the business is legally the same as the owner; therefore, there can be no separation of business credit history from personal. Incorporating a business or forming an LLC creates a business that is legally separate from the owner(s).
  2. Obtain a federal tax identification number (EIN). The EIN is basically a social security number for a business. It is required on federal tax filings, and is also required to open a business bank account in the name of the corporation or LLC. In order to comply with IRS requirements, many larger businesses also require an EIN from their vendors in order to pay them for services provided.
  3. Open a business bank account. Open a business checking account in the legal business name. Once open, be sure to pay the financial transactions of the business from that account. If you use a business credit card (see below) for many financial transactions, be sure to pay the credit card bill from your business checking account.
  4. Establish a business phone number. Whether you use a landline, cell phone or you use VoIP, have a separate number for your business and in your business’s legal name. List that number in the directory so it can be found.
  5. Open a business credit file. Open a business credit file with all three business reporting agencies: Experian, Equifax and TransUnion.
  6. Obtain business credit card(s). Obtain at least one business credit card that is not linked to you or any other owners personally. Pick a business credit card from a company that reports to the credit reporting agencies.
  7. Establish a line of credit with vendors or suppliers. Work with at least five vendors and/or suppliers to create credit for your company to use when purchasing with them. Ask them to report your payment history to the credit reporting agencies.
  8. Pay your bills on time. Perhaps it should go unsaid, but be sure to pay your bills on time. Like with your personal credit, late payments will negatively impact your business credit.

 

Benefits of having good business credit

Having good business credit can provide a number of benefits, including:

  • Positioning your company for more favorable payment terms with new vendors and suppliers.
  • Reducing the number of times you will need to prepay for products or services purchased.
  • Allowing you to obtain better interest rates and credit terms from lenders and banks. Once you have established and built good business credit, be sure to monitor and protect it, just as you do with your personal credit.

 

About Author: BizFilings is committed to empowering entrepreneurs and small business owners with the information and tools they need to make informed decisions, whether that be guiding them through the incorporation process or arming them with the resources they need to keep their business running.

Related Posts Plugin for WordPress, Blogger...

Filed Under: Entrepreneurship, Featured, Startup Tagged With: business credit, credit report, establishing credit

About Guest Blogger

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Facebook
  • Instagram
  • Linkedin
  • Pinterest
  • StumbleUpon
  • Twitter
  • YouTube
Sylvia Browder PhotoSylvia Browder
When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left, and could say, ‘I used everything you gave me... Read More about Sylvia →

Affiliates

Sign up to receive our FREE Financing Your Small Business Toolkit

FEATURED SITES

advertise on Sylvia Browder's website

NEW COURSES

Ad
Ad

Entprepreneurship

Entrepreneurial Energies: 4 Steps to Becoming a Successful Business Owner

Entrepreneurial Energies: 4 Steps to Becoming a Successful Business Owner

Explore More

 

Turning Customers into Advocates

4 Important Steps for New Business Owners Before Seeking Funding!

Building Security: 3 Ways To Make Your Business Safer

Latest Articles

  • Entrepreneurial Energies: 4 Steps to Becoming a Successful Business Owner
  • Turning Customers into Advocates
  • 4 Important Steps for New Business Owners Before Seeking Funding!
  • Building Security: 3 Ways To Make Your Business Safer
  • 6 Strategies for Making Your App Stand Out in the Marketplace

JOIN COMMUNITY


Visit National Association of Women on the Rise

© Copyright 2013 Sylvia Browder's Blog for Women Entrepreneurs · All Rights Reserved · Site Designed by Browder Consulting Group LLC Admin Login