Starting Business Credit? Top 10 Expenses You Should Get Credit For

May 21, 2014 By Marco Carbajo

Starting Business Credit

Is your business getting the credit it deserves?

Does your business expenses help establish your company’s creditworthiness?

In this post we’ll be covering the top business expenses companies make on a regular basis but never get credit for. It’s surprising how many business owners don’t realize all the expenses they make that never get reported to the business credit agencies. What’s even worse, many of these typical business expenses never get put in the company’s name.
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Start Business Credit: What Business Structure Should I Choose?

November 24, 2009 By Marco Carbajo

Business Entity

Start Business Credit: Entity Selection

I get asked this question quite often and thought I would clear the air on what business entity selection is best when you start building business credit. This step by far is the most important because it’s the foundation for what you will be building your business credit upon. Not to mention all the other important areas that entity selection affects such as taxes, liability, asset protection and so on.

When a client comes to me for advice on selecting the best business structure, the first questions are:

What Does Your Business Do?

I ask this to get you into the best structure for taxes. How your income is taxed depends on the type of income your business earns. If your income is earned through passive sources – rent, portfolio income, etc., it will be taxed differently than if your business provides a product or a service that you sell.

Where Do You Live?

I ask this question because where you live can make a difference to the kind of business structure you form. Some states charge more for one type of structure over another. Knowing where a client lives allows my entity specialist to choose the most economic structure.

How Much Does Your Business Earn?

This question again relates to taxes, and is specifically geared towards someone who receives “earned” income (that’s income from selling a product or providing a service). There’s an income threshold we look at – once your income surpasses it, it’s time to rethink your options.

Taxation is a Critical Factor!

Did you notice that all three of those questions are related to taxes? That’s the secret lesson to take away here. All business structures will work in all situations. The secret is knowing which business structure best matches your income and tax situation so you keep more of what you earn.

The mistake I see so many business owners make is selecting the wrong entity structure for their company. They get anxious about building their profile with the business credit bureaus and think that one type of entity is better than all the rest. There is no cookie cutter approach to entity selection because every business is different. Don’t take any shortcuts in this step because it can cost you big time.

As a business owner, you have four real choices when it comes to business structures and two bad choices:

* C Corporation

* S Corporation

* Limited Liability Company

* Limited Partnership

* Sole Proprietorship

* General Partnership

Business Credit Blog » Business Credit » Start Business Credit – entity selection for business credit

Sole Proprietor and General Partnership

To learn why Sole Proprietorships and General Partnerships are so dangerous to you and your family, read on.

A Sole Proprietorship is bad…

Have you heard the saying “You get what you pay for?” Well, you normally don’t pay anything to start either a Sole Proprietorship or a General Partnership. Of course you don’t get anything, either. Unless you count the following as valuable business assets:

* Lots of personal liability

* No protection from your business creditors

* An increased risk of being audited

* Problems with valuation for a subsequent sale of the business

The reason for this lack of protection is because neither of these structures is considered a separate legal structure. Instead, they are considered personal extensions of you, if you are operating as a Sole Proprietorship, or you and your partners, if you’re operating as a General Partnership.

And, because these business types are considered personal extensions of you, you don’t have any protection from them.

But a General Partnership is Downright Ugly!

It gets even worse if you are operating with a partner as a General Partnership. That’s because not only are you responsible for all debts and agreements you enter into in the name of your business, you’re also on the hook for all of your partner’s actions in the name of your business as well. This can be devastating if your partner is financially irresponsible, and, because either of you can bind the partnership; you have zero protection from your partner.

If You Don’t Choose a Good Entity, the Government Will Choose a Bad One for You!

If you’ve been doing business up to now without a business structure, both the IRS and your state government have defaulted your business into either a Sole Proprietorship or a General Partnership.

And that means you’re exposed.

Select the proper business structure and incorporate your company if you want to start business credit and you want to protect yourself from personal liabilities. So if you already decided on the right entity structure then the next step is incorporating your business.

If you already have an existing entity set up then the next key step is obtaining a federal Tax ID.

Business Credit Resources

» Business Credit Seminar

» Business Credit Insiders Circle

» Business Credit Blog

Are you ready to incorporate and start building business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system.

To Your Success!

Marco Carbajo

About the Author

Marco Picture 2009 Super Small pic Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. Want to learn more about how you can become a member and gain access to Marco’s business credit secrets, sources, and information on how to obtain unlimited financing for your business without a personal guarantee? Claim his FREE ‘Eight Steps To Ultimate Business Credit Without a Personal Guarantee’ audio seminar ($597 Value), for a limited time by submitting your name and email below =>

How to Start Building Business Credit

November 11, 2009 By Marco Carbajo

Vendor credit lines commonly known as “trade credit” is the largest use of capital from business to business and remains the #1 alternative to personal and small business loans. The SBA even reports that vendor credit is the single largest source of small business lending in America today. It also happens to be the initial foundation for businesses to start building business credit.

So what is vendor credit?

Vendor credit is when a company, like an office equipment supplier, allows your business to purchase products and pay for them at a later date. Typically the terms range from Net 15, Net 30, Net 60, Net 90, or even Net 120 payment terms. These vendor credit lines work like a charge card meaning that the balance must be paid in full on or prior to the due date.

The primary benefit to using vendor credit lines is that it will provide your business with thousands of dollars in products and services it needs up front while allowing your business to defer the payments for later. This helps you conserve cash flow for more critical short term expenditures your business may have. The flexible payment terms also allows your business plenty of time to pay the invoice when it comes due.

A secondary benefit is vendors report your positive payment experience to the business credit bureaus. The more vendors you establish credit lines and payment experience with the stronger the business credit profile you will build. This alone can positively impact the size of the credit limit recommendation for your business which is determined by the business credit bureaus and publicly disclosed on your business credit file.

However, one of the biggest mistakes made by small business owners is assuming that every vendor reports their payment history to the business credit bureaus. Currently there are over 500,000 vendors who extend lines of credit to businesses but less than 6,000 report your payment experience to the business credit bureaus.

So when you start to build your business credit file be sure to select vendors that report. You can verify this by inquiring with a vendor that you plan to apply with. Be sure to ask what business credit agency they report to and how often they report.

One of my favorite aspects to vendor credit lines is the minimal qualifications required for approval. In many cases an application only requires your business contact information, Federal Tax ID#, Dun & Bradstreet#, authorized name and signature and not your social security number or personal guarantee.

The specific vendors requesting only this information will pull a business credit report to base their approval which makes obtaining vendor credit lines much easier and more convenient compared to credit cards or loans. A prime example of one of these types of vendors is a company called Quill. Quill sells office supplies, cleaning supplies, packing and shipping supplies, school supplies, printing supplies, and more. From filing and storage to hand held computers, Quill has a wide range of discounted top name brand products.

Quill offers a net 30 account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days. For small orders you can get approved if your business has a listing on the 411 directories and a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.

As you can see vendor credit lines provide your business a way to build a strong business credit file while avoiding the use of your personal credit and guarantee.

*Don’t want to bother doing all this research to find what vendors report to the business credit bureaus? Well, the good news is that I have compiled a list of vendors that are actively reporting to the business credit bureaus and more specifically which ones they report to! To receive this and many other secret business information join my Business Credit Insider’s Circle!

To Your Success!

Marco Carbajo

About the Author

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Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE “Eight Steps To Ultimate Business Credit Without A Personal Guarantee Audio Seminar“($597 Value), available by simply submitting your email below=>