First, apply for an Employer Identification number at the IRS website. Forming a corporation or LLC as opposed to a sole proprietorship or partnership has its benefits. Corporations and LLCs afford business owners liability protection, and you can build a business credit profile that's separate from your personal debts. You may be able to apply for credit under your business's name and obtain credit without a personal credit check or guarantee if the credit grantor will do so.
In addition, as a sole proprietor or partner in a partnership, you are personally liable for the debts of the business, and all your personal assets are at risk in the event of litigation.
Two, it's extremely important for businesses to meet all the requirements of the credit market in order to ensure a higher likelihood of credit approval. In fact, not being in compliance with the credit market can raise red flags with both credit bureaus and grantors. The red flags include simple things like not having a business license or a phone line. Most businesses will not grant credit to another business that hasn't taken the steps to set the company up with proper licenses and local, state and federal requirements.
Three, make sure to prepare financial statements and a professional business plan. These documents are often required by many credit grantors.
Four, when a company grants your business credit, be certain they report the payment experiences you have with them to the business credit bureaus, like Experian. This helps to build your business credit report and a financial foundation for your company.
Five, manage your debts so you don’t fall into trouble making your payments. It's important to monitor your business credit report for changes, especially when you are building a business credit profile. Consider utilizing one of Experian’s products designed specifically for businesses.
Six, make monthly payments to your credit grantors. At some point, almost every business needs some type of credit. To avoid having to use your personal credit history or guarantees to obtain the best possible terms, start the steps necessary to build a business credit profile now before you really need it.
For more business credit facts, visit www.businesscreditfacts.com.