How can I establish credit for my small business? Now your need for business credit may not arise within the first year of scrapping metal but there will come a day when it will be required for something. I actually learned that I should establish credit for my small business from my postman.
Initially I thought that my personal credit and business credit was the same thing. They are not.
They are actually two separate credit ratings.
Right now, you may not think that you need credit but if you plan to grow your business, credit is what you will need.
About 13 years ago, I received a call from a customer that had just over 33,000 pounds of scrap aluminum.
They informed me that I would need a dump truck and a backhoe in order to move the huge bales of aluminum.
Naturally, I thought that I could just get a few guys together to lift the bales onto trailers so I accepted the job.
I did need a dump truck and backhoe. The only company in town that rented this kind of equipment only rented to businesses not people calling themselves a business. That is what the company representative said to me, nice.
Faced with that reality and a customer that wants the load gone within an hour, I had to tell them that I could not take the load of aluminum.
I had to leave all of that money on the table and loose what would have been a great customer. Never again is what I said to myself on the way home.
I took the initiative just like you should to establish credit for my small business. You need an EIN, employer identification number. You need to make your business name legal too.
There is also another form of corporations that are called S-Corporations.
Once you have a legal business name and the EIN, go to the bank and open an account in your business’s name. Get a phone number, not your personal cell number.
Many of the smart phones today allow you to have multiple sim cards. It is cheaper to just push in a new sim card with a new number attached to it into your current phone.
This way, you won’t have to carry around two phones. You could get business and personal calls on one device.
Register your business name with business directories such as Dun and Bradstreet, Hoovers and even your local yellow pages.
Establish good trade credit with local companies.
Be sure to pay all of your bills on time. The easy way to do that is to only use your credit account when you are certain that you can pay the bill off at the end of the month.
Sure, you could make payments but to establish credit for my small business I quickly learned that you had to pay bills off to build credit quicker.
When your credit card is maxed out, so is your available credit, which makes lenders in many cases think that you are risky.
If you have a credit account with a $500 limit, the balance that you owe should be less than $150.
You may have heard it before but the statement is true. When your business has good credit doors open and people listen to what you have to say as well as give you what you want.
If you help with your personal credit, a site called Credit Fixation has some good info that I even referenced here today.
By now, if you’ve been a regular visitor to my site, you understand that my goal is to teach you how to do things the right way.
I am sure that you agree that doing something that you love and being able to make money from it is one of the best feelings ever.
Every time that you find a single piece of metal, you create success for your business so you already know how to make money. Start building your business credit.
Stay safe out there everyone