How To Build a Business Credit Line
Building a credit line for your business is necessary as it allows you to meet and survive various financial challenges in the hour of need. However, establishing that base requires integrity and reliability for a business which is aiming to grow big in the foreseeable future. The task at hand is difficult but by meeting necessary requirements, you will be able to get plenty of credit at your disposal.
Instructions
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1
It is important for you that you separate business credit from personal credit. Use your employer identification number rather than your social security number which will specify that you are seeking to build credit for your business related endeavours rather than personal.
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2
Identify a corporate structure that best matches your business. There are four types from which to choose from. LLC or Limited Liability Corporation is a business structure which takes into account characteristics of both a corporation and a partnership/proprietorship. The basis of this structure relies in the availability of pass-through income taxation and is better suited to a sole owner.
C-Corporation is a legal entity taxed separately from its owner but is subject to double taxation. Apart from the corporate tax, the stockholders are further required to pay tax on dividends.
S-Corporation differs in the taxation process where under the Internal Revenue Code (IRS); the shareholders are required to pay tax on the gains or losses incurred on dividends.
Non-Profit organizations are exempted tax under the IRS as their sole purpose is not to earn profit. Therefore choose the appropriate business structure which will then hold you accountable in the world of business where you will be able to build a credit line. -
3
Contact a credit bureau and get yourself registered by delivering them all the necessary information. The three major credit rating agencies are Equifax, Dun & Bradstreet and Experian. All have their own credit scores and will rate you according to your credit history or the information you have given them. Apart from these, Business Credit USA could be another source of credit.
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4
Start building a credit history. Setup a business account so that all transactions are easily monitored and carried out. Contact your suppliers and start doing business. Make sure to keep track of all your financial dealings and pay them accordingly. That will allow you to build your reputation which in turn will prove beneficial in terms of attain good credit scores.
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5
Having done the initial dealings, you will be in line to open a business line of credit with your bank. Make sure that you maintain the consistency so that you can get large amount of credits when you eventually decide to expand.
