| We all know that establishing a solid credit history for | | | | Credit cards are generally easier than other types of |
| ourselves is important. However, if you're operating a | | | | credit to obtain. Plus, many of the cards have |
| small business you can't neglect the importance of its | | | | reasonable interest rates and can be easy to maintain. |
| credit history either. Otherwise, you may find yourself | | | | They are also very useful for a wide range of |
| needing credit for your company but unable to get | | | | purchases. |
| anything. That's a bad position to be in. | | | | Obviously, maintaining a reasonable balance and paying |
| First Steps to Small Business Credit | | | | your bills on time. You should keep a balance on the |
| Obviously, you need to make sure that your business | | | | card but never max it out - that looks bad on your |
| has its own identity before you can begin building its | | | | report. If possible, look for cards that provide cash |
| credit history. If you are operating the company under | | | | back or other incentives for businesses. That way |
| your own name, then you're not going to be able to | | | | you'll be reaping other rewards from your business |
| separate its credit from your own just as you can't | | | | spending. |
| separate its assets from your own. | | | | Another good reason for choosing a credit card is that |
| To separate your company from your personal | | | | you'll have an easy record of your business expenses |
| identity, you need to register it as an LLC (limited liability | | | | at tax times. Just remember not to use your business |
| corporation) or a corporation. You'll need to complete | | | | card for any personal costs. It might be tempting but |
| the paperwork and pay fees of $100 and up to | | | | you do not want to give in to that temptation. |
| complete the process but you'll also receive some tax | | | | Another alternative is a line of credit through your bank. |
| benefits and increased credibility with your consumers. | | | | Many banks will extend credit to you for the |
| Plus, if things do go wrong with the business you don't | | | | short-term. If you want to pay off the balance quickly, |
| have to worry about that impacting your own personal | | | | just make larger payment. Everything over the |
| credit report. | | | | minimum payment will go directly towards the principal |
| When your register the business a permanent address | | | | so you'll save on interest in the long run. Plus, those |
| and contact information needs to be provided for the | | | | monthly payments will each help build your credit |
| business. A post office box cannot be used. | | | | history and allow you access to better terms and |
| After you have completed the incorporation process, | | | | larger amounts as they are needed. |
| you'll need to gather all of the other paperwork that | | | | Keeping Your Small Business Credit in Good Shape |
| most lenders are going to require: your business permit | | | | Once you have established small business credit, you |
| or license, for example. You'll also need to show your | | | | need to be sure to keep your credit in good standing. |
| financial statements, contracts, business references, | | | | Remember to always make your payments on time. If |
| etc. | | | | you're mailing payments, do so at least five to six days |
| Finally, you should contact one of the credit agencies | | | | before the due date. Even if your payment is received |
| and register your business so they will have a file | | | | a day after the due date, some credit card companies |
| ready for you as you begin building your credit history. | | | | will consider it a late payment and penalize you |
| Keep in mind that these agencies will not be the same | | | | accordingly. |
| ones which keep track of your personal credit. | | | | You should also keep your balances within reason and |
| Experian Business and Dun & Bradstreet are just | | | | work on paying more than the minimum balance each |
| examples of these agencies. | | | | month. This will help you pay down the balance faster |
| Small Business Credit: One Step at a Time | | | | and will lower your interest costs. |
| If you remember how difficult it was to establish your | | | | Finally, monitor your credit report. Errors on credit |
| personal credit for the first time, you'll have a good | | | | reports are quite common but they can have a |
| idea of the struggle you'll be facing with your small | | | | devastating impact on your ability to get the credit you |
| business credit aspirations. One of the easiest | | | | want for your business. Make checking your report an |
| methods of starting a credit history for your business | | | | annual habit. |
| is taking out a credit card. | | | | |