If you are the owner of a new business, one of the most vital steps you can take towards building a successful business is building your company’s credit. There are a number of ways you may build credit for your business. One thing you can do is legitimizing your business.
Legitimizing your business is to run something that is actually making you money with a group of customers. This has to be something more than just a hobby or pastime. Building your credit takes hard work; this means you must plan to use it. It can even aid in benefiting from tax strategies as well.
Another thing you can do is form a corporate entity. In the United States you might form an S corp or a limited liability corporation that can become an S corp. In Australia you can form a Pty Ltd as one form of body corporate. A formal entity will help you in creating a plan for a long run business which will allow for success in building credit.
Once you have worked on building a credit history and have developed a credit score, you can apply for business credit cards. When the time is right, try applying for business Visa, MasterCard, or American Express cards. You can even get a D&B number. This number will become the basis for your paydex score. Much like your personal FICO score, a paydex score is rating system for your business credit. In Australia both businesses and private individuals can obtain a copy of their Veda credit report.
To begin this process you will need to register your company and its employee identification number. Once you have done this you can track your credit score and make sure that creditors are reporting to D&B regularly. Lastly, you can practice good habits. Be sure to always make your payments on time and do not max out your credit cards.
Part of running an efficient business is managing it under a set budget. Your paydex score is what reflects upon the stability of your business so it is pertinent to pay the bills on time.
About the Author: Dominic Lambrinos
Dominic Lambrinos is a financial expert who provides professional business finance solutions, commercial financial engineering, expert review of financial submissions, negotiation, equity raising, business sales, and trade financing. Dominic is also a sought after finance business trainer, and accomplished public speaker. Under Dominic’s guidance, his team can also prepare professional financial submissions, review financial statements, provide financial accounting, business administration, development of information systems, marketing and sales skills, computer and Internet sales skills.