5 Tips To Building Business Credit

Posted by C J on

 By : @TheBlogFAZ | Max Fuega 



When you set your mind on having your own business, it is important to understand that it is a separate entity from you as an individual.  

Unless it is a sole proprietorship (which is not in line with legal or financial separation) you have the unique opportunity of establishing a credit file separate from you as an individual. But first you need to know how to get started...

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Most people register their business as a legal entity to take advantage of the numerous benefits of separating their business finances and credit from their personal finances and credit. 

There are 3 main categories of legal entities for you to choose from when establishing your business : 

  • LLC (Limited Liability Company) 
  • LLP (Limited Liability Partnership)
  • Corporation (S-Corp / C-Corp)

A conversation with a CPA (Certified Public Accountant) well-versed in these categories will help you decide which option is best for your business. Fortune Financial Group Tax Services is a reputable Atlanta-based company that services businesses locally as well as across the U.S. 

To contact a CPA today about what type of legal entity your business should be click here.  (Let them know comp735 ™ LLC referred you). 

LLC (Brief Overview) 

  • Board of directors not required 
  • Unlimited owners (members) 
  • Not personally responsible for business liabilities
  • You choose if you're taxed once or twice
  • Ongoing fees to stay in compliance 
  • Can't go public 
  • Not recognized globally 

LLP (Brief Overview)

  • Each partner's liability is limited (based on what they put in) 
  • Partnerships can limit risk
  • Creditors can't go after personal assets
  • Common businesses : law firms, accounting firms, wealth managers
  • Can heavily rely on reputation 
  • Detail work can be delegated to junior partners
  • Working across state lines requires extensive research

Corporation | S-Corp (Brief Overview) 

  • Maximum of 100 Shareholders
  • Owners can only get common stock 
  • Save on self-employment taxes 
  • Only taxed once 
  • Must have board of directors 
  • Strict administrative rules (ie records, meetings, etc..)
  • All shareholders have to be US citizens or residents

Corporation | C-Corp (Brief Overview) 

  • Unlimited owners allowed 
  • Recognized internationally 
  • Investors prefer this entity 
  • Taxed twice 
  • Ongoing fees to stay in compliance 
  • Board of directors required 
  • Strict administrative rules (ie records, meetings, etc..)

Why some businesses choose to be a sole proprietorship instead of a legal entity

  • Not as much paperwork to get started
  • Fewer business tax requirements
  • Banking is more straight forward
  • Not as many registration fees
  • Business ownership is simple
  • Easier overall process

Now that you have gotten a basic idea of each structure, take time to do your own research to decide which one works best with your short and long term business needs. 


There are many services that can do this for you, but if you want to cut out the middle man and jump into the process head first, then the IRS has a great (AND FREE) assistance tool so that you can make this a part of your business credit building process asap. 

EINs are 9-digits and assigned specifically to your company allowing you to explore many additional benefits (and some requirements) for your business such as : 

  • Opening a business bank account
  • Filing company tax returns
  • Applying for licenses
  • Applying for permits 
  • Applying for business credit


Your EIN must be established prior to obtaining your business bank account. 

Going back to the idea of separating your business financial matters from your personal financial matters, brings the discussion to why your business account is so important. 

Tips For Keeping Business And Personal Separate :

  • Get a DUNS number 
  • Set up utilities in your company's name
  • Get a business credit card

It is not mandatory to have a business account, but why wouldn't you want the cleanest accounting process as possible? 

Having a business checking account simplifies the accounting process for you with no fees when you find the right bank. 

In addition, having a business bank account amplifies your business funding potential. 

Your bank will serve as a bank reference on credit applications as well as provides lenders with data needed during the lending process. 

I am partial to online banks, due to the costs and fees of "brick and mortar" banks, but as always do what works best for you. 


Vendors and suppliers hold the key to your easiest method of credit building. 

By purchasing materials for your business through vendors and suppliers, you are establishing consistency for the ebb & flow of building your business credit. 

Vendor and supplier relationships are also helpful for trade reference when applying for new credit in the future.

Having more than one trade line is key as this creates a business credit profile to start establishing yourself as an entity with the ability, stability, and willingness to pay. 

Two things to look for in your vendors and suppliers:

  • Ones that report to BUSINESS credit agencies
  • Ones that offer NET TERMS

NET 30

If you are familiar with the way that credit cards work then it is not too difficult to figure out how NET 30 terms with vendors and suppliers work. 

This type of payment term will give you 30 days to pay debts with them. 

Aside from just establishing credit this also affords your business the opportunity to hold on to cash for a longer period of time each month. 


But it is not just enough to hold on to your cash, so before jumping into this method of credit building explore how to improve the speed of incoming cash coming into your business. 

  • Customer / Client discounts for quick & early payers
  • Send immediate invoices and put a system in place for follow ups
  • Require slow paying customers to pay CASH ONLY


Some vendors and suppliers are willing to give NET 45, NET 60, and even NET 90 options for the right business. 

The same idea applies, the only thing that differs is the number of days (ie 45 days instead of 30, etc). 

When negotiating discuss early payment discounts to keep more cash flow in you business and build a good rapport.

And if you can't get the terms you want from your vendors you can always use a business credit card.

This will typically give you at least 28 days between debt payments. 

Just be careful not to hold a balance that will start to carry interest as that would defeat the purpose and dip into your cash flow.


Just like with your personal credit, business credit gathers information about your credit worthiness from more than one source and so the picture that is painted about your business can vary. 

There are 3 different agencies :

If you need to make changes, then you can reach out to one of the business credit bureaus and inquire about the process to ensure that your details are showing accurately.

Also like personal credit, established credit history will get you further as it relates to business credit; making it easy to get higher credit approval ratings, lower interest payments, and better repayment terms for loans and lines of credit. 

Account diversity (ie business credit card, line of credit , etc..) is also a helpful strategy to establishing stellar business credit.


Don't let the process of establishing and inquiring about your business credit overwhelm you. 

The Internet is an excellent resource and often times it is as quick as a contact form (on an official website) or an e-mail away to find out details related to your specific profile. 




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