Determining how to access business financing and credit is a common search for both new and existing small business owners. From start-up costs to new expansion strategies, establishing a strong business credit profile can help make or break your immediate and future business plans. By using your business credit to obtain financing, not only can you qualify for a greater dollar amount, but you also avoid liability for your personal assets and credit history. If you would like to expand your business by establishing business credit, use these five simple steps:
Open A Business Credit File-
One of the ways you can establish your business credit is by opening a business credit file with all 3 credit reporting agencies: Experian, Equifax and Transunion.
Incorporate Your Business-
Even though you may be incorporated, it deserves a mention. With sole proprietorships and general partnerships, the business is legally the same as the owner. 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. To incorporate your business you would typically need to file Articles of Incorporation with your state’s Secretary of State office.
Obtain a Federal Tax ID Number-
A federal tax ID or EIN number is a unique identifier for businesses in the US. It is required for federal tax filings and opening a business bank account. You can apply for an EIN number online with the IRS.
Set Up a Dedicated Business Phone Line-
Another way to establish your business credit is by setting up a dedicated business phone line in your business name and making sure it’s listed.
Open a Business Bank Account-
Open a checking and savings account in your legal business name. This will build a financial record for your business, which is important in establishing business credit.
With these 5 simple steps, you can get started on establishing business credit. If you would like to build your business credit further, consider financing your next piece of equipment. When you finance your business equipment through Union Commercial Capital, the transaction is reported using your business credit, which in turn can build your business credit.
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