Your PERSONAL CREDIT PROFILE, for the most part, is created and set on automatic and is built over time as you utilize your credit.
Unlike your BUSINESS CREDIT PROFILE, where you, as the Small Business Owner (SBO), must work purposely and be proactive in managing and building your Business Credit Profile.
It breaks my heart to see Small Business Owners (SBOs) work so hard towards building a strong Business Credit Profile, only to find out months or years later, that their BUSINESS CREDIT PROFILE may not even exist.
YES… all of that hard work by the SBO to build a strong BUSINESS CREDIT PROFILE was a complete waste of time, because they never setup their business the right way from the beginning.
Please…, don’t make the mistake in believing that just because you have a piece of plastic with ‘Business Credit Card’ stamped on it, that you are building a Business Credit Profile.
In fact, if the Credit Reporting Agencies (CRAs) are not aware that your business exists, they are not going to actively go looking for your business.
So, if your business ‘does not exist’ in the CRAs radar, then any effort that you make towards ‘building business credit’ may actually be getting reported to your PERSONAL CREDIT PROFILE… if at all.
If you want your business to ‘exist’, then you must separate your Personal Credit from your Business Credit, and that all takes place in the SETUP of your business, so that creditors, vendors, suppliers, and CRAs will take notice.
So Let’s RevitUp and address this problem, starting today, with this article.
Contact Information:
Your business must stand on its own foundation and this starts with getting a BUSINESS ADDRESS and a BUSINESS PHONE NUMBER. A Post Office Box Address or a UPS Box Address may not do the job. A BUSINESS ADDRESS solution may be getting a ‘virtual office’ that comes complete with a receptionist, answering service, and the use of actual office space when and if you need it. This is cost effective and can give you what you need without a long term commitment to office space. When it comes to a BUSINESS PHONE NUMBER, a secondary cell phone number may not work. Your best bet is to get a Business Phone Number that works over the internet which can then be forwarded to your cell phone or landline.
Get Your Employer Identification Number (EIN):
Applying and receiving your business Employer Identification Number (EIN#) is the first ‘REAL’ step in solidifying and separating your PERSONAL ENTITY from your BUSINESS ENTITY. It’s like giving BIRTH (a metaphorical term I suppose). When your business receives an EIN#, in a sense, it’s like your business getting its very own ‘Social Security Number’ (SS#). Getting an EIN# is FREE on the Internal Revenue Service (IRS) website. You may still need to provide your Personal Social Security Number for identification purposes, but the EIN will designate your business as a separate entity from your personal entity.
Incorporate Your Business:
Setting up your business as an LLC, S-Corp, or Corporation, lends to the belief that your business is legit, and adds to the sense of security for lenders, and goes a long way when trying to establish business credit. Some would say that ‘incorporating’ adds protection from liability. Well, I don’t know all about that. For an appropriate answer, it is best for you to discuss this particular subject with your Legal Counsel or your Certified Public Accountant.
Open a BUSINESS Checking Account:
YES… I intended to use ‘BUSINESS’ in all caps because this is NOT the same as a Personal Checking Account that YOU have designated for business use only. Some vendors, suppliers, creditors, and lenders do require an actual BUSINESS Checking Account for them to designate your business as an actual ‘business entity’ on their books. In addition, if you intend to accept credit cards as a form of payment from your customers, you are going to need to apply for a Merchant Account, which requires a BUSINESS Checking Account. Having a Business Checking Account also makes it so much easier for you to keep your personal expenses separate from your business expenses, which is a HUGE stress reliever when it’s time to do your taxes.
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