It is commonly known that individuals receive credit scores, but it may be less commonly known that credit scores exist for businesses. This is important information for anyone looking to start their own business, as this type of credit can help you achieve your goals.
With business credit, you don't have to rely on personal credit or finances to get your business started. However, there are some important things you should know about establishing business credit.
Once you have incorporated your business, start by determining if you have an existing business credit file. If you don't you can apply for one. According to Forbes, all types of entities are eligible to qualify. Once you have your file established, be sure to update it regularly and monitor it so you can be sure to catch any changes that occur and address them in a timely fashion.
There are several considerations to keep in mind when using business credit. One is to build a positive payment history. You can accomplish this by paying bills on time and staying informed about other factors that could affect your business credit rating. Monitoring your file will also allow help you protect your business from potential fraud. According the the Small Business Administration (SBA), fraudulent activity accounts for 15-30 percent of all commercial credit losses.
The SBA offers several tips to help business owners manage their business credit.
Another important point to note is that it is important to keep separate business and personal accounts, as not doing so could have a negative impact on you during tax time. Incorporating your business establishes it as a separate entity subject to different tax regulations. Incorporating will allow you to take advantage of the benefits of business credit.