In a phenomenal article posted by the U.S. Small Business Administration, the author, Marco Carbajo, explains how a small business can go about establishing business credit. The article, How to Establish Business Credit for the First Time states:
“Access to cash and credit is a business’s lifeline. Business credit allows a company to borrow money that can be used to purchase products or services. It is based on the trust that payment will be made in the future.
Why establish business credit? For business owners, having a separate legal entity, such as a corporation or limited liability company, provides the unique ability to create a credit identity with business credit reporting agencies, also known as a business credit profile.
A business credit profile is important because it is used by credit grantors to determine whether or not to extend credit to a business.
Before you establish business credit for the first time, the first step is to structure your business as a separate legal entity. Next, you will need to apply for a tax identification number, also known as an employer identification number. This is the number used to identify a business entity for tax filing and reporting purposes.
Once your business has been properly formed and in operation, the next step is to apply for credit in your company’s name. There are several basic types of business credit you can acquire as a newly formed startup or existing business with little to no credit identity established.” Read more…
At Expex, we know the value of good business credit and establishing healthy and consistent bookkeeping and accounting practices. Not all SMB’s can afford to outsource these tasks with bookkeeping services or accountants and that’s where we come in.
Spend 20 minutes with us for a quick look at how Expex can automate your bookkeeping, improve cash flow and provide financial visibility with an easy to use web app. Your business will be healthier and happier and so will you!