Archive for September 2011
Business Credit: Every Small Business Owner and Entrepreneur Should Know This
America prides itself on the entrepreneurial spirit. Consequently, small business owners are increasingly becoming major key economic stimulators. When a small business owner decides to incorporate his or her business, that small business owner has just begun the process of creating a brand new and separate entity. Basic business law dictates that a corporation is a “separate and distinct legal entity having its own privileges and liabilities distinct from those of its member.”
Given this information, it then becomes essential and relevant that small business owners develop and maintain a unique and separate business profile. Every small business can and should establish their business credit. Just as it is important to maintain a personal credit profile, the same care, if not more, is needed to maintain a business profile.
The rules and regulations that govern business credit are totally different that the rules that govern your personal credit. Furthermore, the advantages as well as the necessities are apparent to some and not to others.
With the opportunities provided by government agencies, whether local or national, small business owners should be aware that an established business profile is valuable and necessary when partnering with the government for contracts and other ventures.
Additionally, limiting or avoiding personal liability is another key factor why a small business owner needs to be aware of and develop his or her business profile history. Purchasing goods or services under the name of a properly structured business entity can possibly afford the owner or owners some personal protection if the business finds itself in a position of litigation or debt.
The long term gain of a properly maintained business credit profile can afford the small business owner with better financing terms. A financial institution today will usually take into consideration a company’s business credit profile when making business loan decisions. This can also assist in receiving S.B.A. backed loans. Additionally, retailers and vendors can offer great revolving terms or net terms all based on your company’s business credit history.
As a result, when possible, attempt to do business with companies that report your payments to the business credit agencies. This can be a huge plus in developing your corporate credit profile.
Another aspect associated with establishing and maintaining a business credit profile comes in the form of creditability. As well as appearing legitimate to the banks, suppliers or vendors that you do business with, your business credibility can be scrutinized and looked over by individuals as well.
More and more individuals are willing to explore a small businesses’ credibility by actually reviewing the company’s business credit history. This gives information such as – How long has the company been in business. Are they paying their bills on time? Does this company have any judgments or liens against them that the individual should be made aware of?
For example, Joe Smith can take a look at ABC Roof and Repair Inc, and find out if any judgments or liens were ever placed against the company for possible faulty work. This can be a valuable tool when deciding to choose a contractor for major projects.
Business credit can be understood and achieved by any properly structured organization. Whether you are a mobile business, storefront, street vendor, personal trainer, stylist, personal barber, eBay seller, home business or consultant, it is beneficial to you as a business owner to understand the basics creating and maintaining your business credit profile.
Credit Coach – Companies That Can Help You Build Business Credit
I work with all kinds of entrepreneurs. Some are glad to sign on the dotted line to guaranty a loan. Many don’t mind using their home or assets as collateral for their business because they believe in themselves and believe in their business.
But there are times – and circumstances – when someone doesn’t want to – or can’t – use their personal guaranty, their personal credit. Sometimes an entrepreneur can’t or won’t use their personal assets. So what can they do?
They can build business credit – often unsecured and without your personal guaranty. As long as business owners find the right ‘business credit coach’, it is very possible to set up business credit cards, lines of credit, loans, and business terms with vendors of all kinds. As I always say, when looking for these coaches, make sure you pick the right one. There are good ones and bad ones.
These business credit coaches offer a step-by-step process that results in a solid foundation for business credit success. The steps are proven to help you obtain credit and financing for your business… sometimes it is guaranteed!
Many have a systematic approach with highly predictable outcomes to ensure your long-term success. Many companies offer a web-based back office that carefully tracks your progress and measures your results helps you to know exactly what you have accomplished, what you are currently working on, and what is to come.
There are various levels: some offer a guidebook, others give you unlimited access to trained coaches throughout the program. The assist in preparing credit and loan applications and target the application to the best lenders nationwide.
A general list of offerings include:
1. Registering your business with Dun and Bradstreet.
2. Obtaining a DUNS number for your business.
3. Establishing a proper DUNS rating for your company.
4. Entering your business into the banking system.
5. Providing you with a list of vendors who report to
the business credit bureaus.
6. Providing you with a list of vendors who will grant business
credit without a personal guarantee.
7. Providing you with a list of business credit cards
to apply for.
8. Assisting you in obtaining a standard industrial classification
code.
9. Assisting you in obtaining a favorable Paydex score.
10. Assisting you in obtaining a favorable Intelliscore.
11. Assisting you in setting up the foundation for building
business credit.
12. Provide you with banking contacts that will grant unsecured
business lines of credit.
13. Set up of your Corporate Experian business Credit report
14. The business credit coaches will also be your first trade
account reporting to Corporate Experian.
Business Banking – An Overview
Making a success of your business depends on planning and judgement. ‘The bottom line’ is all about managing your finances wisely, whether that means sourcing the funding you need to start up or keeping on top of your accounts.
Setting up or running a business calls for a separate account. Not only will this make your accounting a lot simpler, but also business accounts are tailored specifically to the needs of business clients. Many have a specialised team to deal with business accounts, and can offer help in the form of start up packs and individual advisers. Business accounts differ from personal accounts in that you will normally be charged for transactions – for making deposits and withdrawing funds, for example.
This guide gives you a broad overview of how to open and manage your business account, including:
1. Getting The Right Account For Your Business
How to choose and open your account – what factors to consider and what information you will need.
2. Finding The Finance You Need
Common ways to source funding to set up and run your business, including grants, borrowing, loans and overdrafts.
3. Keeping Your Accounts Healthy
Good practise for managing your account, including info on online banking and finding an accountant.
4. Professional Advice
How to find expert advice on accounting and tax issues. This section includes web addresses for professional bodies.
Having a good relationship with your bank will make a big difference to the success of your business, whether that means extra support when you’re setting up or negotiating an overdraft to smooth your cash flow. Bank business managers can provide a useful source of advice and support – it’s likely they have a good knowledge of the market as well as insight into businesses similar to yours. Based on your individual needs, they should be able to suggest ways to make your business banking more efficient, as well as offer practical solutions to make the most of your account.
As well as your banking contacts, there are a wealth of other sources of help and advice. The government runs several schemes to help businesses get off the ground and keep running – from enterprise loans to business mentors who can guide you through the early stages of your project. Starting a business is a real challenge, but with good planning and sound management, you could turn your dreams into reality!