Top 5 Reasons to Establish Business Credit For You Homeshoring Business!

 Many new business owners  are unable to get business credit so they have to use their personal credit to finance the launch, expansion or growth of their business.  The majority of business owners have no idea what business credit is or how to establish it. By following a few simple steps any business owner can establish business credit, separating their personal credit from their business credit.

Using your personal credit card to pay for business expenses you are  increasing your personal debt to income ratio.  This will cause  the debt of the business reports back to their personal credit reports lowering their scores because their business debts hurt their personal debt to income ratio.

To help prevent business owners from damaging their personal credit, every business owner should follow the simple steps of establishing business credit. By establishing business credit the debt of the business will report to the business credit file and not the personal credit file. Establishing business credit will also help the business build a strong business credit file so loans, lines of credit wont require the business owner to sign a personal guarantee.

Here are just a few reasons why every business owner should establish business credit.

1). Establish creditability. You cant expect to walk into a bank and ask for a business loan with no business credit or business history. By establishing a good business credit profile you will be able to secure the financing your business needs.

2). If your business should fail, you would still be legally responsible if you used your personal credit to finance your business

3). Saving money. That is right, business credit rates are typically lower than personal credit rates. A few percentage points in interest mean thousands of dollars in the long run

4). Float your business through tough times. Even though everything make be going great currently, you never know when your company will take a turn for the worse or when economic times might change. By establishing business credit you will be prepared for the down time.

5). Get the money you need. Lets face it, without the money you need to finance the launch or expansion of your business you really wont be in business at all.  Do not make the mistake of using your personal finances to finance you business.

The are many, many more reasons why you should establish business credit. We have all heard the saying, "keep business expenses separate from personal expenses," right? The only way to do that is to set up your business properly in the first place by establishing business credit.                                          

 Interested in learning the basics?  A good starting point is to do your research and find the answers to the questions below.                                                                       

-What rights does a business owner have if there is incorrect information on a credit report?

-How do I obtain a business credit score?

-What do business lenders look at in order to extend business credit?

-Where do you find companies that grant credit?

-Which companies report to the business credit bureaus?

-What credit cards companies do not require personal guarantees?

 You can get the business credit you deserve.  My suggestion is to start the education process of learning how to establish business credit today!

 

Can I Establish A Business Credit File For My Homeshoring Company?

Yes you can! Creating a business credit file for your homeshoring company is more achievable than you ever imagined. I am sure your first thought is “this is probably a very difficult goal to accomplish”. Establishing your business credit file will take some work on your part but let me assure you that it is a lot easier than you think. It is very feasible to establish a business credit file for your homeshoring business.

Corporations are separate legal entities having their own privileges and liabilities distinct from those of its members. For taxes and credit purposes corporations are treated as individuals. When your homeshoring company is registered as a Corporation or Limited Liability Company you are protected from all personal liabilities. As a business owner you have the unique opportunity to have a separate business credit file and a personal credit file. The two files will never commingle.

Dunn and Bradstreet and Experian Business are the two major business credit reporting agencies. Most businesses are assigned a paydex score based on their trade lines. For a new business a padex score of 75-80 is regarded as positive credit rating. My suggestion is that before you start applying for corporate credit, your paydex score should be 80 or above. Keep in mind creditors are not required to send information to the business credit bureaus. They do so voluntarily, so if a creditor is not reporting just ask them to do so.

To start the process of establishing a business credit file your homeshoring company has to be registered under the correct organizational business structure and have all the following documentation:

• Business Plan and Financial Statement
• Articles of Incorporation
• Business Licenses including all Permits allowing you to do business in your area
• Employer Identification Number (EIN)
• Dedicated Business Telephone Line - has to be listed under legal name with 411
• Your Dun and Bradstreet number – 9 digit number used to verify credit history
• A Corporate Checking Account

Now that you have all your documentation in place you can start applying to companies that are willing to establish business credit without using your personal credit file. These companies should also be willing to report to the major credit reporting agencies. A good starting point is with companies like Staples, Office Depot, Home Depot, Target and Gas Cards companies. If you have excellent personal credit you may want to consider applying for an unsecured American Express and or Business Credit Card. Before starting your quest for corporate credit the business credit reporting data base should reflect at least 5 trade lines and 3 credit cards.

Still not able to find that dream homeshoring opportunity? Then take a look at An Inside Job explore all available options.  You can check it out here!