Now that you have started your business, where do you go from here? The next thing to do is to build business credit in three easy steps.
One of the first things to do is separate your personal finances from your business finances. That requires opening up a business checking account. The money in your business checking account will be used for all of the business expenses. Do not mix your personal money with your business money, meaning: do not buy groceries with your business debit card, or write personal checks to vendors to pay for supplies.
Eventually, you will see the benefit of keeping the two separate as your business grows to the point that your personal finances can’t keep up with the business demands.
Before you step into the bank to open your business bank account, understand that a business bank account will need an Employer Identification Number and proof that your business is registered. To get an EIN, go to the IRS website and first determine your eligibility. Then use their preferred method by clicking the “apply on line” button and complete the application in one sitting.
Contact the Secretary of State’s office in your state, get the Articles of Organization for an LLC, or the Articles of Incorporation depending on the structure of your business and pay the fees and file the forms.
As a reference point only, this PDF shows what documents are required to open a business bank account for all business structures in the state of Montana, but you should contact your local bank for their specific requirements.
Once you have a business bank account, it makes good business sense to apply for a business credit card, especially since these types of credit cards can convert to cash. The application and award process isn’t as stringent as dealing with a traditional lender. Business credit cards operate the same as personal cards and can be used to purchase everything you need for your business to succeed.
However, you must be responsible for your usage because delinquencies will be reported on your personal credit file and credit limit increases depend on your payment history. Use business credit often, pay the bill on time and do not ever max the card out.
Credit bureaus and lenders evaluate creditworthiness differently. Your business credit profile is similar to having a resume for your business. Most companies that look at your business credit file expect a complete and unbiased view of who you are and if there poses any risk working with you, so keeping your personal credit and business credit intact is just as important to build credit for your business.