The following is a guest post to the Smart Growth Strategies Blog.
When running your own business, you want to make sure all of your finances are in order, especially come tax season. You want all of your reports to be organized and easy to find so nothing is overlooked, and you want the whole process to go as smoothly as possible. However, a few business owners fail to realize that their business credit is just as important as their tax information.
Maintaining a good business credit score is incredibly important for businesses of all types, but it can be much easier to ignore when there are other business goals on your mind. What business owners need to realize is that this score could help significantly should you decide to get a loan to expand your small business.
5 Key Steps to Clean Credit
Even if you aren’t planning on getting a loan or looking for investors in the near future, it is still important to maintain a good credit score. If you let this score drop too far, it can be very difficult to build up again, and you don’t want to have to go through that struggle in the months before you need a loan. To avoid this uphill battle, all you have to do is follow a few guidelines to build good credit and make sure your report stays that way.
- Keep track of your personal credit – Especially when your business is young, you need to make sure your personal finances are in check. If you need money from any type of investor before you are able to build good business credit, they will want to see your own credit report to evaluate your ability to handle money.
- Check your business credit reports as well – Once you have established some business credit, you will want to keep tabs on that report also. Check your credit reports once a year to make sure all of the information is accurate, and to see if your business might be accepted for some form of credit. Don’t let false reports or identity theft make you a victim.
- Protect your business – Another important part of maintaining good business credit is protecting the information about your business. Make sure you shred any documents you no longer need and keep track of other documents with important information on them. You don’t want someone using your business information and harming your business credit in the process. Also, do background checks on your employees to make sure they are trustworthy, and keep important documents in a secure place away from those who don’t need to see them.
- Use a business credit card – To build your business credit, you could try to get a business credit card. This type of card is good for many reasons, including building credit. It will also help you keep your business finances and your personal finances separate, which is very important when you go to file your taxes. You will easily be able to see your business expenses on your business card and your personal expenses on your personal card as long as you use each card responsibly for its intended purpose.
- Pay your bills and your taxes on time – This is extremely important if you want to build good credit. Your ability to make payments on time takes up a huge percentage of your credit score, so you will want to show the credit bureaus that you are able to handle debt.
Vanessa Lang is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. Additionally, she works for a website that focuses on educating readers about payday advance loans.