Learn the best ways to build Business Credit for your your new business. These are listed below and will help guide you to establishing business credit in your Business Name and not using your personal credit. This way you can keep both your personal and business credit separate.
You’ll be glad in the long run by keeping your finances for personal and business separate.
Building business credit can be crucial for small business owners looking to secure financing and establish credibility with suppliers and vendors.
Here are some of the easiest ways to build business credit:
- Incorporate your Business: Incorporating your business as an LLC or corporation separates your personal credit from your business credit. This protects your personal assets if your business runs into financial trouble. Check with a tax professional in your area to see which form best fits your business situation. You can start this process by visiting your Secretary of State website in your area.
- Obtain a Federal Tax ID Number (EIN): A tax ID number (also known as an Employer Identification Number or EIN) is required to open a business bank account and establish credit with suppliers. You can get this by visiting the IRS online to complete the application to get your EIN.
- Open a Business Bank Account: Having a separate business bank account allows you to keep your personal and business finances separate. This is important when applying for loans or credit cards. You can open an account with a local bank or you can start with an online bank. These banks are backed by larger banks, in most cases.
- Apply for a Gas Card: You can get a Gas credit card fairly easy. They start off with low credit lines, but you can ask for higher credit lines as you use and pay for your account.
- Apply for a Business Credit Card: A business credit card can help you establish credit for your business. You can apply for cards from your business bank or you can search for a rewards card if you charge a lot per month. Make sure to pay your bills on time and keep your credit utilization low.
- Pay your bills on time: Paying your bills on time is the most important factor in building business credit. Late payments can negatively impact your credit score.
- Get Business Trade Credit: These type of cards you get from Lowe’s, Home Dept, Office Depot, Office Max etc. You may have other retailers that you utilize in your area. These are another good source for business credit.
- Establish relationships with suppliers: Building strong relationships with your suppliers can help you establish credit. Ask them if they report payment history to credit bureaus.
- Monitor your credit reports: Regularly monitor your business credit reports to make sure there are no errors or fraudulent activities. Correct any mistakes immediately. There are many services that provide this. Such as FreeCreditReport.com and Experian.com
Remember, building business credit takes time and consistency. By following these steps, you can establish a strong credit profile for your business.
