As a lifelong entrepreneur, Peter J. Burns III is a true business guru. Burns has started over 150 successful businesses during the past four decades, including Burn$ Funding. He started Burn$ Funding to provide other entrepreneurs with sound solutions to their financial and credit needs. According to Burns, your business absolutely needs to have good credit in order to be as effective and lucrative as possible.
What is business credit?
Business credit is built much like personal credit is built. However, business credit is tied to your employer identification number (EIN). While personal credit tells lenders if you are a reliable borrower, business credit tells lenders if your business is a trustworthy entity. When credit-reporting entities like Experian and Equifax consider your business credit score, they take several factors into account. These factors include the length of your credit history, your credit card utilization, your repayment history, and outstanding balances.
Why is business credit important?
- Good business credit will make you more eligible for excellent financing opportunities.
Without good business credit, your chances of securing the capital you need for your company are limited. It is also important to know that the U.S. Small Business Association (SBA) reports that businesses have between 10 and 100 times the credit capacity of individuals. If you want your company to grow, business credit is a must!
It is also important to consider that even if you do not need extra capital right now, you should always have an emergency fund in the event of an unexpected occurrence. Emergency business funds are of the utmost importance! For example, if you were unable to work for two months, you would still need to pay your employees.
- Building business credit will help you protect your personal credit.
Never max out your personal credit card to pay for business expenses and always keep your business and personal credit separate. As previously mentioned, you will be able to access a much greater deal of credit as a business, as opposed to as an individual. Entrepreneurs like Peter J. Burns III know that is nearly, if not entirely impossible to run a business using only personal credit. In order to scale your business, you definitely to build your business credit.
- Having a business credit card will help you to separate your expenses.
For accounting purposes, it is crucial to know where your money is going. Without using a business credit card, it is very difficult to separate personal expenses from business expenditures such as payroll. By tracking your business expenses carefully, you can make the right decisions about where to spend your organization’s money and where to “trim the fat.”
Furthermore, if you own an LLC or a corporation, you definitely need a shield between your personal assets and your business. A separate business account can help you to protect you from being personally liable for debt accrued by your company and legal fees incurred due to lawsuits.
- Cost segregation opportunities should never be overlooked.
If you want to retain more of your money, it is absolutely essential that you take advantage of cost segregation. When you file your taxes, it is much easier to separate your personal and business assets if you use a business account for your company’s expenses. Maximize your tax saving by using a business credit card.
How do I build business credit?
- First, incorporate your business or establish it as an LLC.
- Obtain an employer identification number (EIN). This number is similar to your social security number, but it identifies your business (as opposed to you as an individual).
- Open a bank account using your company’s legal name.
- Apply for a business credit card, spend wisely, and repay your balance.
For financing solutions and opportunities to build your business credit, visit www.burnsfunding.com, which was established by Peter J. Burns III in order to help entrepreneurs and founders to manage their financing. There, you will find a variety of business-savvy tools to help you succeed. You can even apply for Peter J. Burns III’s Entrepreneur’s Credit Card. The card will allow you to receive up to $175,000 in unsecured credit and you will pay 0% interest for 12 months or longer.
Follow Burn$ Funding on LinkedIn here for more information and updates on the company’s special offers.
Article by L.K. Bright