Even if your business is virtually a one-man band (which is to say, you are self-employed), it’s not a bad idea to establish a separate business entity, such as an LLC, an S-corporation, a C-corporation, or some other type of company as a way to avoid added taxation, limit liability, and protect your personal assets. And one of the greatest benefits you’ll gain along the way is the option to start building credit under your legal company name. You might not think it is terribly important to separate your personal credit score from your business credit rating. But what if you have to file bankruptcy personally, just for example? What if your business faces a liability lawsuit? You don’t want your business to get dragged down with you, or vice versa. The point is that building and maintaining business credit is important. Here are a few reasons why you need to establish good credit for your company.
For one thing, a separate credit identity can help to lend credibility to your business. If, at some point, you’re seeking lenders, investors, or partners, having a solid credit history established on behalf of your business can legitimize it to other business interests, improving your prospects. Even vendors along your supply chain may be more likely to do business with you when your credit is in good standing. And creditors will certainly look more favorably on the prospect of offering your business lines of credit when you’ve shown a proven ability to pay in a timely manner, building and maintaining your professional credit score along the way.