Your business relies on reliable funding. Even if you've got a substantial, profitable business running, you'll need someplace to pull extra financing from, if only to expand your business or set up a line of corporate credit to work with. If you're starting a new business, it can be even harder to live without good financing, and without any funding at all, it is impossible. You can't start a business without good funding, but if you need money in your business bank account, bad credit can be your worst enemy.
You aren't going to be able to establish a business without an outside source of funds unless you're already independently wealthy. But if you're a small-time business owner, or looking to start up a new business, it's your business bank account bad credit can affect, even if it's your personal credit that's suffering! How can you make sure your business can get the funding you need?
You need to establish better business credit. In order to improve your business bank account, bad credit needs to be turned around so you can get the approval from lenders that will allow you to take out the funds you're going to need to build your business. And, while it's a little more complex to establish business credit than personal credit, it's vital to your company.
The first thing to do is to establish your business as a corporation. While this does remove a little of your direct control over the business in the long-run, it's a good idea. It can protect your bank account and, by establishing better credit, it will improve your business bank account. Bad credit reflects poorly on you and your business, but if your personal credit score is suffering, the fastest way to improve your business credit score is to separate it from your personal credit score. By establishing your business as a corporation, you'll set it up as a separate legal entity, allowing the law (and lenders) to treat it as a completely different person from you. That means that your corporation now has its own credit history, and you have yours.
Along with establishing your business as a separate legal personality, you'll have to set up a separate bank account for your business. Your company will need to have its own spending budget, separate from yours, and it'll need a place to draw all that money from. As well as establishing a separate bank account, you'll need an EIN, or Employer ID Number. This number is to your business what your Social Security Number is to you; it allows the government, lenders, banks, and credit cards to recognize your business as a legal entity.
In order to establish good credit for your business, you'll have to start establishing credit the same way you would with a personal account: by paying off your bills on time. You can do this by asking your vendors and suppliers to report your financial history with them. If you have a business, then you've been doing business with someone, and your business record with them will show how trustworthy you are.
Credit cards are also an important part of this process. You'll want to set up several credit cards for your business, so you can establish a good line of credit with these companies (and with the credit card companies.) By paying off these credit card bills on time, you'll be able to establish a good line of credit for your company. Be careful, though; you'll need to make sure that the credit card companies you choose are willing to treat your business as a separate entity, rather than simply setting up a personal account for you. You'll also want to be certain these companies are willing to report your scores, or you won't be getting anywhere.
Corporate Credit Concepts specializes in "KEY PHRASE". For more information about "KEY PHRASE" and how it might benefit your business, please CLICK HERE for a free phone consultation.