Building business credit in Florida is important when running a business. It helps a company to secure loans that would help it sustain and grow.
There are some steps to take when building business credit. This involves registering your company, getting business bank cards, and dealing with vendors.
But why is building business credit in Florida so important? Here’s a brief overview of it.
What is business credit?
Business credit serves as a measurement that indicates a company’s ability to borrow money from creditors. It is reflected in credit reports that can be obtained from credit bureaus; Experian Business, Dun & Bradstreet, and Equifax Small Business. These reports are examined by lenders to assess whether the business is creditworthy enough to be granted a loan.
A business credit report includes a company’s information, credit history, credit usage and limits, as well as public records such as bankruptcies, legal filings, and UCC filings.
What is business credit used for?
There are 5 important aspects of your company that can be affected by business credit.
- Your ability to raise money.
- The creditors’ decision when you apply for loans, this includes the following: whether to approve a loan, credit limit, payment terms, and interest rates.
- It allows your business to avail insurance premiums.
- Your ability to enter contracts with other organizations to expand your business.
- It protects your company from being affected in case you’ll have bad personal credit.
What are the steps in building business credit?
Step 1: Legalize your business.
There are some requirements before you can start building business credit. This includes: Registering the business with the secretary of state, obtaining a business license, getting a business phone number, and acquiring an EIN, among many others.
One of the easiest to do this is by using the Business Requirement Tool in Business Credit Machine. Where you will have a checklist of all the requirements to build business credit with the expected required fees, URL to submit application, and other information on how to acquire a certain requirement.
Here’s a screenshot from the Business Requirement tool.
Tip: Register your business as an LLC, LLP, or corporation. This is to ensure that the government, bureaus, and creditors will treat you and your business as two separate entities. This will also allow you to have separate business credit reports and personal credit reports. By legally separating yourself from your business, you are protecting both credit accounts from dragging each other down once one fails.
For instance, if your company struggles in paying off debts or gets sued, you will not be liable as it is a separate legal entity. Therefore, your personal assets such as your house or cars will not be compensated to pay for your business debt. Creditors can only collect payment by going after the company’s assets and vice versa.
The business registration fees in Florida vary on your type of business. Here’s a summary to give you an idea.
Business Registration Filing Fees in the Department of State of Florida
| Filing fees for corporation | Filing fees for LLC | Filing fees for LLP |
| Filing fee – $35 | Filing fee – $100 | Partnership Registration Statement – $50.00 |
| Registration Agent Designation Fee – $35 | Registration Agent Designation Fee – $25 | Statement of Denial – $25.00 |
| Certified Copy (Optional) – $8.75 | Certified Copy (Optional) – $30 | Statement of Dissociation – 25.00 |
| Certified Of Status – $8.75 | Certificate Of Status – $5 | Statement of Dissolution – $25.00 |
| Statement of Partnership Authority – $25.00 | ||
| Statement of Qualification – FL or Foreign LLP – $25.00 | ||
| Statement or Registration Amendment – $25.00 | ||
| Statement or Registration Cancellation – $25.00 |
But there are other fees you may be required to pay. Here is a full list of fees to register a business in Florida.
Step 2: Open a business bank account.
Once you have obtained all the requirements to legalize and established the foundation of your company, it is time to start building business credit. Begin with opening a business bank account that you can use to deposit your income and have a record transaction of your company’s financial flow. This is crucial as creditors are interested to see a company’s bank account and cash flow to approve a business loan. It will be hard for a company to take out a loan without a bank account to back up the company’s financial health.
Step 3: Get a business credit card
Obtaining a business credit card is easy and a great way to start building business credit. It offers lots of benefits. Such as a low introductory rate which you can take advantage of to buy supplies without dealing with high-interest rates. There are also rewards, cashback, and bonuses like what you get on personal credit cards. The good thing about business cards is it offers bigger credit limit than personal credit cards.
Tip: Do not open multiple business credit cards in a short period of time. The benefits may be overwhelming but it is not advisable to apply for many business cards within just a few months or a year as it can lower your business credit score.
Step 4: Establish trade lines with vendors and suppliers
Get your supplies and needed services from vendors who report to business credit bureaus. Talk to your suppliers if they are open to giving you a credit line like Net-30 or Net-15 trade credit. This means availing their supplies or services and paying them within 30 or 15 days to help you build business credit. Don’t forget to ask and ensure that you are dealing with vendors who report to business credit bureaus. This is vital as some vendors do not report so better make sure to build business credit fast and hit two birds with one stone; getting your supplies and building good business credit.
In Business Credit Machine, you can easily request credit with its reputable creditors database.
Simply go to the Business Area then select Tier 1 or Tier 2.
If you want to add more creditors that is not on the list, you can do so by going to Menu, scroll down to My Setting, BCM Setting, then choose if it’s Tier 1 or Tier 2 account.
Step 5: Pay your bills early
Make sure you’re on your way to building good business credit by keeping track of your due dates and paying your bills on time. Do not miss a single payment even for just a day as this will reflect in your credit reports for seven years. This can greatly negatively influence creditors’ decision-making in approving your business loan. Plus, of course, it will lower your business credit score. Once you have late payment remarks on your business credit reports, it can be hard to recover.
Using Business Credit Machine helps you pay your bills on time by setting a task or event on your computer or mobile device.
From the dashboard, click Menu, CRM, then Super Calendar to set an event.
For instance,
Step 6: Keep track of your business credit health
Monitoring your business credit scores is a good way to ensure that you are building good business credit.
Reasons why monitoring your business credit score is important when building business credit in Florida.
- Keep track of the changes on your reports and identify any errors.
- Verify whether the creditors you establish an account with are submitting to credit bureaus.
- Review who is inquiring about your business credit.
- Prevent identity theft by reporting unauthorized inquiries in your credit reports.
- Quickly correct false information in your business credit reports by identifying errors and filing disputes with credit bureaus as soon as possible. This process may take several months or even a year depending on the type and number of errors that need to be corrected.
Therefore, monitoring your business credit reports is essential to make sure that the document is complete and accurate. Any wrong information in a credit report can lower credit scores which is the last thing you want to happen when building business credit.
It is recommended to check business credit scores quarterly. If you have Business Credit Machine, you can easily extract credit reports any time you want in the Item Center.
Just head over to the Extract Report tab to pull out current credit reports from different trusted credit reporting sites.
Then you can keep track of your credit score in the second tab.
Finally, in the Items tab, you can list derogatory items that you found in your current credit reports for easy tracking.
You can add a record by clicking on the Add Record button. You can also filter the records if you want to hide negative or positive items from the list. In the left section, you add the creditor’s name and select the dispute type, reason, and template from the dropdown list. On the right side, you can select the credit bureaus that have errors in their credit reports, the status of your dispute, and add a private note.
Building business credit is essential for every business. It’s a part of entrepreneurship that shouldn’t be ignored. Many companies rely on Business Credit Machine to make their business credit building convenient and cheaper. The software is also used by many business credit builder professionals as it is not only a business credit builder software but also a CRM program, marketing program, and sales program that is very useful when running a business. Visit Business Credit Machine – The Best Business Credit Builder Software to learn more about what it has to offer.
Now that you have a good understanding of how to build business credit in Florida, here are a few more articles about credit building that you may find helpful.
- The Fast Track: How to Build Business Credit in 30 Days and Unlock Financial Opportunities
- Tier 2 Business Credit Vendors That Help You Build Business Credit Fast
- Types of Business Credit Scores; Everything You Need to Know
- What Is Business Credit Score? All You Need to Know
- Best Way to Build Your Business Credit Score
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