19 Feb
Business Credit: Why Small Business Owners Need Business Credit
Posted in Business by video 18 CommentsQuestion about business
What is a business that can not be enhanced by the internet called?I am doing a research paper in which I am going to discuss E-commerce and internet businesses versus anti-internet businesses only that is not a real word. So please DON'T give me an obvious and idiotic answer like "business." I am looking for businesses that do/can not use the internet to greatly benefit themselves. THANK YOU!!
THANK YOU, AFTER DOING SOME WORK I REMEMBERED BRICK-AND-MORTAR BUSINESSES.
If you currently have a business or you are considering starting a business, establishing business credit is a good idea. According to the National Association of Credit Management (NACM) small business owners should take steps to establish credit in the name of their business as a way to preserve cash flow for necessary business operations, purchases, and rental payments. Here are a few basics to begin building business credit.
Separate Your Business Credit from Personal Credit
Business credit can and should be established separate from personal credit. When business owners use their personal credit to obtain business credit, they run the risk of lowering their personal credit scores. The business owner also risks being personally responsible for business liabilities. If you file bankruptcy and your personal and business credit are one in the same, you stand to lose everything. Business credit protects your personal assets.
No Personal Guarantees
The most important element to establishing business credit is finding lending institutions, credit card issuers and vendors that will establish business credit without you giving a personal guarantee. A personal guarantee involves using your personal credit information to guarantee repayment of the debt incurred by the business. In other words, you are obligating yourself to be 100% responsible for the business debt. It may be your intention to fully repay any debt incurred by the business; however, obligating your personal and business assets to repaying business debts can lead to financial ruin if any business setbacks occur.
Business Structure
Doing business as a sole proprietor will not allow you to distinguish your business credit from your personal credit. As a sole proprietor you may be “doing business as”; however, you are not a separate business entity. In order to establish business credit without a personal guarantee you must structure your business as a separate legal entity such as a corporation or limited liability company. Even if you have been doing business as a sole proprietor for years, you can restructure your business into a separate legal entity. Besides, it is a better choice to set your business up as an entity separate and apart from you. Your business could get sued and if all of your assets are tied together, financial ruin may be lurking in the background. Having a separate entity protects your personal assets.
Tax Identification Numbers
Your business entity must have an Employer Identification Number (EIN) also known as a Federal Tax Identification Number (Tax ID). The EIN is your permanent number and can be used immediately for most of your business needs, including opening a bank account, applying for business licenses and establishing a business credit file. Never use your social security number. It may also be necessary to establish a State tax identification number. For the federal tax identification number you can apply online at www.irs.gov. The application process is fairly simple and you can receive the EIN immediately.
Business Checking Account
Your business entity should have at least one bank account, in the name of the business, that can be used as a bank reference. The older the bank account, the better. Having a business checking account helps in establishing your business identity and reputation. Banking relationships are still important in the business world. Building a strong relationship with your bank can be of assistance when you begin to seek business financing.
Get a Business License
You must always register your business and obtain a business license in the State, County or City where you conduct business. For some reason, this is not always done by businesses. It should be at the top of your “to do” list. Always register your business in the jurisdiction where you conduct business.
For a step-by-step process for building business credit please visit: www.rebuildcreditscores.com/Business_Credit.html
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guzen
on February 19 2010
Rania you are the most important woman in the world!
Jason Bordeaux
on February 19 2010
1. Fees — explain in plain simple English the fees. Merchant account bills are worse than telephone bills in terms of the fees that you find
2. Chargebacks — what are the recourse of the merchants? Once a customer complains, a chargeback is immediately filed irregardless of the fact that the amount was refunded. This month, we had a case where we got slapped with a $20 chargeback fee for a transaction that we refunded a day after the transaction came in due to suspicions of credit card fraud (our hunch proved correct). But we were already charged with the chargeback fee and our merchant account provider does not want to refund us.
charliesworld05
on February 19 2010
you will also need a comprehensive business plan to have any hope of getting a business loan or investor interest
nacao
on February 19 2010
Surely THIS (getting education to embrace right-brained thinking) is what our Western world needs to clean out the poisoned thinking that has brought us into the mess we currently experience? Surely once we have sorted ourselves out, then we are in a position to help those in the Third Word? You are a great lady and a very positive force for these urgent, historic and pivotal times. May you and your family experience abundant Love and Blessings.
Rossonero NorCal SFECU
on February 19 2010
Choosing your provider is the most important decision you will make. All the answers will not be ones you like – just be sure they are honest…
In this business, if your rep won't spend an hour on the phone explaining every detail – find one that will. Failure to understand what and how, and how much and how long, can cost you a fortune.
If the rep doens't take an interest in your business and its growth through possible solutions like PC based (even Wireless with WWAN), Web Based (virtual terminals and web based sales), terminals, and billing options (if needed), find another rep.
There are hundreds of methods of processing and everyone you speak with will offer the mass majority of them. So it really comes down to the service your rep offers you – not the support desk, not the bank – you'll almost never talk with them, whereas you will always go first to your rep.
If your rep doesn't explain the difference between off-line debit cards and credit cards (Visa CheckCard is an example of an off-line debit card), and their associated costs to process – find another rep. If they simply tell you PIN based debit is always cheaper – they LIED.
Anyone who is quick to the ink (that is getting you to sign their contract) is likely not interested in you as a customer long term – they just want to sign you and then dissappear.
Be careful, be wise, and b.good.
psychic
on February 19 2010
The Western World has been dumbed down by a systematic focus on logic and left-brain reasoning. In this way, a country can create un-thinking masses who can be easily controlled. Also, left-brain thinking creates an ‘us and them’ mentality. It creates a ‘problem-focussed’ mentality. It creates a ‘me’ rather than a ‘we’ society. Right-brain thinking creates a ‘we’ society – a society where respect, sharing, solution-focus, inventiveness and genuine inquiry into difference happen.
corpo
on February 19 2010
I say this too.
You probably won’t post this.
In fact, you shouldn’t.
The people that you are representing gambled away our future in the derivatives market.
We are broke.
You know it and I know it.
So who is it that you are defending exactly?
rails
on February 19 2010
I just can say that you are just a great smart queen wish you can do something for the poor jordanians. I like your accent and the sense of humour you have.
urbantool
on February 19 2010
For the world to progress into a better world, if EDUCATION is the key, then BUREAUCRACY is the stopper.
With the average global IQ going DOWN, and critical information being ridiculed into entertainment, will people ever understand?
With the dumbing down of MEDIA ENTERTAINED nations, education may just be the only way to stimulate brains to learn to think again. And maybe turn the average IQ back up again?
But will the ever growing bureaucratic OVERHEAD allow this to happen?
truth
on February 20 2010
haha he said ma’am instead of your majesty
But I love Queen Rania, she is not only beautiful but smart, and caring
sprint_nextel40
on February 20 2010
No lender will talk to you unless you provide them with a valid business plan. Go to http://www.sba.gov , http://www.score.org or http://www.bplan.com for sample business plans and instructions on how to write a business plan.
Then, go to http://www.score.org/ and in the upper left hand corner, enter your zip code. On the next screen, you will get information on the nearest SCORE chapter. Call them and arrange for a free meeting with a SCORE counselor to review your business plan and discuss various loan options available to you.
SCORE is a nonprofit association dedicated to entrepreneur education and the formation, growth and success of small business nationwide. SCORE is a resource partner with the U.S. Small Business Administration (SBA).
SCORE has 389 chapters in locations throughout the United States and its territories, with 10,500 volunteers nationwide. Both working and retired executives and business owners donate time and expertise as business counselors.
jpro
on February 20 2010
Hey Rania.
You make some good points
.
Maybe certain real issues should be brought to the forefront. Multinational corporatism should not override national sovereignty. This is the number one issue on the global stage and you know it.
Secondly, the people are aware of the lies and spin being pushed by the same powers trying to maintain control. It’s having a negative effect and it isn’t going to last much longer.
Now as for the educational system, you already know.
watch?v=CWGsj5NgZ5Y
business4jroberts
on February 20 2010
First of all you need to, if you haven't yet, draft a business plan to show a lender what you plan on doing to generate money. A lender will look at your plan and decide what the risk is. Unfortunately your credit is a problem, but some lenders will take the risk if you have been in business for at least 24 months. You may to take a higher interest loan or use collateral to secure the loan as well.
jbrowning001
on February 20 2010
When it comes to credit card processing there are 2 way to go about this. The first is through pay-pal or a like company.These are what we call in the industry 3rd party payment processors. These types of companies are good only if you are a small company, usually from home and if you are doing under a $1000.00 a month. The pros to this can of account is that it is an easy setup and simple to use. The cons are that it is web based, you as the business owner have no real protection against chargebacks(when a customer dispute a charge) pay-pal is always going to be on the customers side and not yours. Also it takes 4-5 days to receive your money. The 2nd options is opening a merchant account. This is meant for business owners that are doing over $1000 a month. These types of account is for retail locations, over the phone orders and ecommerce. This system is very fast, run a card and within seconds the customer is either approved or decline and then on to the next one. The pros are that you are protected against chargebacks, you receive your money in1-2 days and you have complete control over you account. The cons are it may cost a little more upfront for equipment but most companies can offer inexpensive equipment or possible free. As far as credit score go, merchant services companies are just like any other finance company. Some have very strict policies and some not so strict. Working in the merchant services industry myself I know certain companies that won't touch anything under a 650. On the other hand I know of companies that have a min required score of 500. The nice thing about this is that unlike a finance company which will charge you more because of poor credit, merchant services companies do not. It is either you are approved or not, but you still receive the same price(% rate) regardless of credit score. The last thing is, it also depends on what type of business you have (restaurant, gas station, hair salon, etc) certain companies have an automatic approval policy based simple on the business type. Which means if you business type falls into certain "preferred business type" you will be automatically approved regardless of credit. In the industry we know certain types of companies work better and have less issues than other. To give you an example, if you are a restaurant and go into a bank and try to get a loan, 9-10 banks won't even look at you. However in the merchant services industry if you want an account you will be approved 99.9 out of a 100 times. A merchant services account is just an open line of credit, just like a loan. If i had a little more info I would be able to give you exact details. Hope that this helped. If you need any more info don't hesitate to ask.
eveyinorbit
on February 20 2010
There are some others out there. Guidelines are constantly changing (especially this year) however in the past Home Depot, Office Max, Kinkos, Lowes were some. Some of these companies rely more heavily on your business credit scores….so your going to have to get that in real good order and find ways to get it as high as possible. Also, one of your challenges is going to be time in business, even though you have been in business for 2 years you were using a different tax id # as a sole prop and now being incorporated your business credit file which is tied to your tax ID # is only 4 months old. This will difinetely cause challenges depending on the company you are applying with and their guidelines.
George L
on February 20 2010
It NEVER hurts to be listed with Dunn & Bradstreet.
earthlink
on February 21 2010
Palestinian beauty!!!
pink3dout
on February 21 2010
Most credit cards will require a principal of the company to submit personal information – even if you are a corporation in many cases.
If you are a sole proprietorship, you and your business are a single entity, and therefore, jointly responsible regardless of any DBAs. If you are a corporation however, there are credit cards that will use the federal tax ID number only when reviewing credit history. I have both a Chase and BofA business card accounts with required no personal information – but these were invitations by banks with whom we had a relationship with.