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Tips On Building A Business Credit

A few ways enlisted to build a business credit efficiently:

Building a business credit plays a very crucial role in the funding ability of the business. In order to keep the business and personal finances separate, one can start building the credit in the company’s name. From start up costs to strategic costs, everything helps in the expansion of the business. However, establishing a business credit does take fore planning and some management. It is only with the help of a good credit profile that a business can use to have an edge over its other competitors and bring its plans to fruition.

Here are a few ways enlisted to build a business credit efficiently:

  • 1. Registering your business entity- A registered business entity is required because one’s business credit history is different from one’s personal credit history. In order to keep both these finances separate, one should give the business a separate distinct identity. If you are unsure about the appropriate entity type for your business, you can seek the help of a business accountant or attorney.
  • 2. Get an Employer Identification Number (EIN)- An employer identification number is used to track businesses for the purpose of taxes. It is very essential in keeping your personal and business accounts expenses separate. An EIN is usually required by any business which retains employees. With the help of securing an EIN, you can effectively establish your business which will help keep your regulatory, financial, and legal related aspects and matters in proper order. An EIN also helps you maintain your corporate veil. A corporate veil is something that protects the business owners from personal liability for the debts of the business. They also help in the prevention of identity theft and track your business credit. Good business credit is very important as it can lead to better interest rates along with a better possibility of expanding your business in the future.
    It serves as a social security number for your business. An employer identification number is also essential in helping you establish a business credit.
  • 3. Opening of a business bank account- Separating your personal and professional finances is always a better idea for the expansion of the business. Opening a business bank account will help you differentiate between business finances and personal finances. A business bank account should only be used to pay expenses related to the business. Having such an account also creates room for better credit accounts in the future.
  • 4. Business address and phone number- Having these two aspects will help in giving your business a distinct identity. This will also allow you to register with business directories. You can also maintain transparency by reporting to credit agencies with the help of a business phone number.
  • 5. Acquire a business line of credit- A business line of credit is important to cover day to day expenses of your business. This also helps in separating the expenses for the business.

A low credit score is very limiting and hinders growth and expansion of the business. It is very imperative to establish a business credit if one wants to receive trade credit on agreeable terms.

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