Don’t Let Tangled Finances Ruin Your Business Credit

Posted by on June 12, 2013 in Business Financing, Business Management [ 0 Comments ]

Business FinancesWhen starting up a small business, it might be tempting to grow your personal and your business finances together, but it is important that you keep them separate.

As your business progresses, it may be harder and harder to untangle profits and expenses and control your credit score.

If your business fails, you also want to be sure that your personal finances are protected so that you don’t get caught up in bankruptcy.

Related: Find a merchant cash advance to help grow your business

Open a New Business Account

Opening a completely separate account will help you start your business out on the right foot. You can choose to open your account with the same bank you use personally, but be sure it is specifically labeled as a business checking account.

  • A business checking account will help you to establish a banking history for your company. It will help you maintain a professional demeanor when interacting with customers, vendors or investors.
  • Sorting through statements at the end of the month will be much easier if your personal account is kept separate. It will also help you avoid error in payments and fees.

Get To Know Your Banker

As a new business owner- a good relationship with your banker could be one of the most valuable tools to carry with you throughout your career. If you keep lines of communication open with your banker, they can give you important advice or help get you out of a sticky financial situation you may find yourself in. Your banker can answer any questions you might have about business finances or applying for loans or lines of credit.

Related: Should You Use Personal Savings to Fund Your Business?

Use a Business Credit Card

Though it is not wise to fund your business solely on credit, applying for a business credit card is a good idea when setting up your business banking. When paired with a business checking account, your business credit card can help to keep your company on track at all times.

  • Taking out a business line of credit can help you build your business’s credit history and score, which can be useful it’s in good standing when applying for more financing or making business partnerships.
  • Most business credit cards come with discounts or rewards programs that can provide you with bonuses like insurance coverage, discounts, or travel coverage.
  • Like personal credit cards, business cards shouldn’t be used for huge purchases, and should be paid off regularly and on time in order to preserve your credit score.

Know Your DUNS Number

Your Data Universal Numbering System number provided by Dun & Bradstreet is a unique nine-digit identification number for each physical location of your business.

  • Your DUNS number is not connected to your personal credit history, and helps to protect your business if your personal finances take a hit.
  • A DUNS number will allow you to apply for government funding and bid on government proposals, and are free of charge.

Related: Bad Debt: How to Spot the Early Warning Signs

Monitor Your Accounts

Keeping track of both your personal and business bank accounts will help you make wise business decisions and keep you updated on necessary action.

  • Go Mobile: mobile banking for both your personal and business accounts can give you access you your funds no matter where you are. Most bankers offer mobile logins for their accounts.
  • Set notifications to keep you on track with payments.

Mixing your personal life with business can hurt you in quite a few ways- one of them being your finances. Keeping your credit and banking information completely separate is a way to keep them both safe, and could end up saving your business in times of financial crisis.

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