You’ve got a great product or service and a vision for the future. Now how are you going to finance it?
Over one in four businesses are stifled by their lack of funding. While many start-ups pray for angel investors, drain their bank accounts, or hit up mom and dad, we’re going to show you another way.
We’re going to teach you how to build business credit and give you the tools to fund your dreams. Keep reading to learn all about building business credit and investing in your future.
How to Establish Business Credit
First, you need to determine if you already have it. If you don’t have a credit account for your business, it’s easy to set up.
Here’s the steps you need to take:
- Decide if your company is an LLC, C Corp, or S Corp
- Get an EIN (employer identification number) from the IRS for tax purposes
- Set up a business phone number which helps with credit verification
- Open a bank account for your business
Business credit isn’t always in the form of a credit card. Let’s look at what can be considered credit.
What Counts as Business Credit?
Applying for a business credit card is only one way to get credit. There are other options your company has.
Here are a few ideas:
- Apply for a business credit card — the simplest option
- Ask for a small business loan
- Ask your vendors or suppliers if you can purchase items on credit
If you opt for that last choice, make sure you get detailed payment statements from them. Now that you’ve got credit, here’s how to maintain it and build it.
Pay Your Bills
We can’t stress this one enough. Paying your bills on time is crucial to building great credit.
If you’re struggling, it might be time to hire an accountant to stay on top of your finances. Hiring a credit repair service like Lexington Law reviews can also help.
Keep it Separated
Your business and personal credit should be separated. While you might start out charging everything on your own cards, they should be two distinct entities once you incorporate your business.
That being said, keep on top of your personal credit as well. Both will be scrutinized when determining your scores.
Use Your Card
Almost 70% of small business have a credit card. Only 24% of those are smart enough to use it for everyday purchases.
Building business credit is easy when you charge small, reoccurring expenses to your card. Remember to treat it like cash and don’t charge anything you don’t have the funds to pay off.
Now You Know How to Build Business Credit
Growing your business can be tough but growing your business credit doesn’t have to be. You’ll never wonder how to build business credit ever again with these tips and tricks under your belt.
Building a company from the ground up is difficult but exciting. If you want the latest advice on starting, maintaining, and growing your business, read our business advice blog every day!