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Once you have an idea for your business up and running, you are going to want to make sure that you are doing a good job of building business credit. Business credit is, of course, incredibly important for financing purposes, as well as business purposes, as many times a potential business client or partner will demand to see a business’s credit profile before deciding to conduct business with them.

Business credit starts with incorporation. In order to develop a business credit profile, you will need to keep your business under the name of an LLC or a C-corp. Your choice depends on your management style and your business aspirations; if you want a business that is easy to set up, has little paperwork to maintain and is very flexible with the distribution of administrative power, you will want an LLC, whereas if you want a business that is more secure and may one day go public, it would be wise to incorporate. Either way, this is the first step towards developing your credit profile.

In order to register with Dub & Bradstreet or Experian, you will need an EIN and a designated telephone line and bank account for your business. Your credit profile will then be operative, and you can begin building business credit.

Business credit cards are a very useful way to start this procedure. You can build credit with business in much the same way that you would build personal credit; just make sure that the business credit cards you are applying for only affect your business credit score and not your personal credit score. At first, you may have to get a secured credit card, which will require you to hold a certain amount of money in a savings account as collateral for the credit card. This is a good idea, as it helps you build business credit.

Business credit is slightly different from personal credit, in that it operates on a scale from 0-100 (with 75 being excellent) and unlike personal credit is not built just by paying your bills on time. The most important factor in the determination of your business credit score is your business’s profitability and stability. Developing these key things is the key to building a solid credit foundation, as well as running a good business.

This Business article was written by Mark Karavan on 1/12/2010