Establishing business credit is the first thing that an entrepreneur must do when the open a business. Without business credit, there is no way for your business to grow and expand in the future. Of course, building business credit takes time and effort. But, you can speed up the process using business finance strategies that have worked for many entrepreneurs that have come before you. If you need to learn how to establish business credit, keep reading below to inform yourself of the best strategies to build credit for business.
Get Your EIN
First, you need to procure an Employer’s Identification Number after incorporating your business. This establishes your business as a formal, legal employer with the IRS. It also provides the identification your business needs to establish credit, because it identifies you as a legitimate business entity. Apply for an EIN with the IRS using the forms and resources available on their website. Then, you will be able to put the additional steps below into motion as you learn how to establish business credit.
Get A Business Bank Account
Once you have your Employer Identification Number for business, you must open a business bank account. This business bank account will be the first step you take to build credit for business. Be sure to utilize your legally incorporated business name to open the bank account, rather than your personal information. Otherwise, the new bank account will only serve to build personal credit for you. You can consider big name banks, like Capital One Spark Business, or you could choose to look into small local banks and credit unions. Open a business bank account in your legal business name to start building credit for your business.
Get A DUNS Number
To establish business credit, you need to get a DUNS number for your business from D&B. DUNS stands for the Data Universal Numbering System. These unique, nine-digit numbers are given to businesses to establish a business credit file. Obviously, this number is necessary to establish credit for your business. Without it, your business will have no identification number on while to build its credit history and will be forced to resort to fundraising on a budget to fund future growth. Apply for DUNS number to build business credit for future business success.
Get A Credit Card
Apply for a business credit card once you have an EIN and a bank account. You will have an easier time getting approved for business credit cards than you will applying for business loans. Be sure to use your credit card for business expenses only. Then, make a point to pay off your balance each and every month. This is the quickest way to build business credit. Thankfully, it requires no additional efforts other than simply spending business capital you would have anyway. Make sure you employ this tactic when you want to establish credit for business.
Get The Right Suppliers
Choose the right suppliers if you want to easily establish business credit. Look to do business with those companies that report your monthly payments to credit reporting agencies. This way, you can build business credit history without having to do any additional work. All you have to do is place your orders and pay for them like you normally would each month. Then, let those vendors and suppliers report your payments to the credit bureaus. This is one of the best and easiest ways to learn how to build credit for business. Take advantage of it by finding the right vendors that report to credit agencies.
Learning how to establish business credit is crucial for future business success. In order to grow and expand your business in the future, you need to have business credit history to secure the loans to fund those business expansion plans. You do not need to hire a small business accountant just to build credit for your business. Instead, build business credit using the finance strategies detailed above. As long as you take these steps with your business, you will establish credit to build and improve upon for years to come. That way, your business can grow and succeed for as long as you want and need it to.