Building your business credit is very important, especially as soon as you start. You need to separate your business and personal credit history from the beginning, and it’s quite simple to do. Just follow these steps.
1. Register your business and get an EIN
If you’re trying to separate your business and personal credit, the best form of owners
hip for your small business would be an LLC. Once you register, get your Empoyer Identification Number (EIN). Your EIN will be used for all of your business transactions and for your business credit. You won’t need to use your own social security number. You can apply online for your EIN number on the IRS website. The website also includes more information on the number.
2. Get a Dun & Bradstreet DUNS number
D&B is kind of like Experian and Transunion for businesses. You can use your DUNS number when applying for credit and the lenders will report to the agency. It will show lenders your credit history, if you made your payments on time, and how much debt you have. For more information and to get your DUNS number, you can visit the D&B website and get one online.
3. Get an office supply store credit
This is probably the easiest way to get your business credit started. Many office supply stores like Office Depot and Staples offerstore credit for small businesses. They also report regularly to D&B, so you’ll start building your credit history in no time. And since you’ll most likely need office supplies for your company, might as well use their store credit to pay for it. Both Office Depot and Staples let you pay off all at once or keep a revolving balance for larger purchases.
4. Get a business credit card
Once you start building your credit slowly, get a business credit card such as Visa or American Express. These will be beneficial because not only do they report to D&B, but they’re usually accepted everywhere. You can make most of your business purchases on your credit cards and build up your credit history. Try only to have a couple of business credit cards, and keep a watch on your balances. Only use them as needed, and don’t spend them on unnecessary purchases.
Take home advice
Using the above steps will allow you to build your company’s credit history. You will no longer need to leverage your personal assets in order to get a loan. Many banks and other lenders look at your D&B profile to check your history, and once you’ve built it up, it will be much easier to secure a loan without personal backing.
You will want to build your credit history because in the future if you ever decide to expand or start a new project, you will not need to tap into your business cash flow, and will be able to finance it cheaply.
If you have any other tips or questions regarding building business credit, please comment on this post.