What’s the #1 business credit mistake that small business owners make when trying to build business credit? There are a number of business credit mistakes that small business owners and entrepreneurs make regularly, but the number one business credit mistake that businesses make is not opening up a business banking account early enough and not separating their personal finances from their business finances. In fact, did you know that some business lenders consider the day that your business bank account was opened to be the day that your business was started, regardless of your incorporation date? Meaning, in the eyes of some small business lenders, your business may have been open for years, but if you just opened your business banking account one month ago, your business is one month old in the eyes of specific business lenders. Not opening a business checking account soon enough is the most common business credit mistake made by entrepreneurs when building business credit.
Business credit mistakes are common just as personal credit mistakes are, but small business owners would be wise to avoid making business credit mistakes if at all possible. One way to avoid making business credit mistakes would be to enroll in a business credit education program, take a business credit course, or use a variety of the business credit services that are offered online. If you’re not willing to take a business credit course, use a business credit service, or invest in your business credit education, at least make sure that you separate your personal expenses and banking accounts from your business expenses and banking accounts. One way to get on the right path is to open a business checking account or business savings account. Other considerations that business owners should consider after they incorporate or form a LLC is to get a proper amount of business insurance to cover their business activities.
Business credit mistakes may be somewhat common, but there’s no reason to make business credit mistakes when you can avoid them. Opening a business checking account, business savings account, and a business money market account is quite easy. As a matter of fact, there are many free business checking accounts that have no monthly maintenance fees and no minimum monthly balance. With that said, if you’re looking to build business credit and want to establish a solid business credit file, it helps to keep an average balance of $10,000 or more in your business bank account. While not every business can do that, a $10,000 business banking balance would be great, but it doesn’t mean that you can’t build business credit if you can’t keep a business banking balance that high.
You can still build business credit if you follow certain business credit building steps and focus on avoiding business credit mistakes and building business credit by meeting the business lender compliance minimums and following certain steps. You may find it good to build business credit if you’re looking to apply for business financing in the near future. By building business credit, there may be potential benefits to your business and you may find that there are more business financing options available to you business if you build business credit, have solid business revenue and cash flow, and keep a solid business banking balance.
In conclusion, there are many business credit mistakes that business owners make, but the #1 mistake and most common business credit mistake is not opening a business banking account after they start doing business. If you have recently incorporated or formed a LLC, you may want to speak with a business banker about opening a business banking account. You can also compare business banking accounts on our business banking account comparison page. You may find it advantageous to build business credit, keep a proper amount of business insurance, and keep a solid balance in your business banking account in order to keep your business in a good position to possibly qualify for business financing.