For owners of newly created businesses, a multitude of questions come to mind. ‘Will I be successful?’ ‘Do I need a website?’ ‘What laws exist for the business I am starting?’ Above all, one of the most frequent and important questions is most likely ‘Where will I get funding?’.
Most small business owners start off using personal resources readily available to them. The problem with this method is that these resources require you to personally guarantee your debt in the event of a default. It can also cause your business to deplete your personal assets. That’s why building business credit can increase your buying power while separating your personal assets.
One of the first things you should do once you’ve created a business with your Department of State is to open a business checking account. There are many factors in deciding where you should open your account. One of the key benefits of a business account is it helps in separating your personal and business assets. This is important for tax purposes as well as to maintain a clear audit trail of business expenses in the event the IRS comes knocking.
Get a D-U-N-S Number
Building business credit is not an impossible task, but it takes both patience and time. For most of us building personal credit did not happen overnight. We also did not start off with an unlimited credit card. In the same manner, business credit must be established from the ground up. The first step is to ensure your business is registered with Dun & Bradstreet and Experian Business.
Registering with Dun & Bradstreet (D&B) will allow you to sign up for a D-U-N-S number (free of charge). Creating a D-U-N-S number for your business is the stepping stone to building your business profile. There are lenders and creditors that report accounts to D&B and Experian on a monthly basis. Your goal should be to acquire accounts that report to D&B in order to gain visibility and provide future creditors with the confidence that your business is credible.,
Register with 411
Once you’ve registered with both D&B and Experian, you need to list your business phone number with 411. When starting off, it may seem overzealous to pay for a separate phone number for a business which may not even have provided you with income. There are numerous voice over internet protocol (VoIP) solutions which can provide you with a separate number for business purposes. Examples include Google Voice (free) and Skype (free to other Skype numbers).
Get a Business E-Mail Address
If you’re serious about growing your business, you’ll need a business email address. There are numerous services out there where you can register a business email. We’ve listed some examples below:
- Google Apps for Work – $5 per user ($50 per user
- Office 365 – Basic plan can run you $8.25 per user monthly
Both options come with their additional perks including shared calendars, email support, cloud storage, and security controls. Style Factory has a great article comparing these two productivity tools. Once you’ve obtained a business e-mail address, make sure to secure it.
Get a Physical Business Mailing Address
If you have a physical place of business where you are actually working from on a daily basis, perfect. For others, there are many great services out there which provide either virtual offices with mail forwarding systems or office space for rent. We’ve listed a few below as well as their average cost per month.
- The Yard – Locations in NYC, Philly, Boston, and D.C. They have a $50 “Virtual Office” package which allows you to have a real business address, one hour of conference room time per month, and unlimited shipping/receiving at one location.
- Regus – Packages vary between $89-$450 per month depending on location services chosen.
- DaVinci – Virtual office prices vary from $50-$295 per month depending on location.
- ServCorp – Offering the first month free, their virtual office space packages range between $100-$450 per month depending on location and services chosen.
- WeWork – Based in NYC. They do not offer virtual office services, but they do rent office space between $45-$450 per month depending on NYC location and package chosen.
On Your Way
Once you’ve gone through all these steps (admittedly a lengthy process but necessary nonetheless), you’re ready to start building your business credit profile and increasing your buying power.
What techniques have you followed to set up a business profile? Let us know your thoughts!