Having Business Credit is Essential to Your Business
Set up an EIN
An EIN is a tax ID number associated with your LLC or Corporation. You can use this tax number when you file your tax returns, but, more importantly, use your EIN to build credit for your business. Ensure your business profile information is correct, including your business address, and create and set up an EIN email address.
When applying for a credit card, use your tax ID number to apply for the credit line. Now, when you charge a purchase, and you pay your bill on time, you are building your company’s credit score, which gives you more opportunities to take out more substantial sums of money in the future.
Do Not Choose Sole Proprietor When Setting Up Your EIN
Do not elect to become a Sole Proprietor when you create your EIN. As an SP, all liability for your company falls back on your personal property. This situation puts you at significant risk from a personal standpoint, as everything you own personally can be financially attached to your business. If a client decides to sue your company, no matter what the reason, your personal assets such as your car, home, and retirement account, are all at risk to be depleted by a lawsuit.
Setting up an LLC or an S Corp protects your assets as this designation contains your company and business property separate from your personal property. If you are found liable, for whatever action you’ve taken, the plaintiff cannot access any personal asset, keeping them safely in your hands.
Choose a Business Card with Travel Perks
When choosing a business credit card, look for cards that can earn you points with travel perks such as Chase Venture or American Express, who have tremendous perks for small business owners. Make sure to have your credit card account under your business name, not your personal name. This way, you’re building credit for your business, not your personal credit.
Rebuilding Your Credit Score
The first step to rebuilding your credit score is to pull your credit report. Pulling your credit report does not pull down your credit score if you are looking at your report for information. Check to make sure you are not in the red in any area of your credit report if you are in the red, note what changes you need to make to pull yourself back into the green.
Next, apply for a secured credit line from your bank as this is the safest way to get a credit line for your business. Check your report monthly to ensure your financial information is being reported correctly. Search the data to find out if you have any judgments against you or other activities that can be dragging down your credit score.
Negotiate with Vendors for Credit Terms
At this point, with your credit created and built up to a good credit score, you can now start to negotiate with vendors on terms of 30, 60, or 90 days to pay. If you’re currently at 30 days with the vendor now, and you’ve established a good relationship, ask them to take your account to 60 days. Likewise, if your account is currently at 60 days payment, ask the vendor to bring you to 90 days.
Resources that are mentioned or add value to this episode:
- Persuade To Profit
- Make Money Your Honey Book
- How to Make Your First $100K Online (Even If No One Knows Who You Are)
- Get in on my free webinar, “How to Make Your first 100K online, even if no one knows who you are.” Text the word “Influencer” to 3056801407, and we will see you there
- Receive your free digital copy of my bestselling book by texting MMYH book two to (678) 506-7543
- Text or call us at (305) 504-6533 to find out how you can get in on Make Money Your Honey’s Mentorship Program!