One of the first things you should do when starting a business is to develop business credit. A new business, especially a small business, should do this right away as it takes time to get all the pieces in place. Once you do have all the pieces in place and your business is deemed creditworthy, it can take a massive weight off your business and allow you to continue to invest in your success.
Here’s a step-by-step list of what you should de immediately when starting a business.
1. Choose a business name.
Think this one through carefully. Not only do you want to make sure it will be unique and memorable, but you’ll also want to make sure it is legally available. Just because there are other businesses with similar names doesn’t mean you can’t use it, but be careful. If your business name is similar to another business, particularly in your geographic area, your business credit profiles could get mixed up with one another. While you are at it, check domain names and social media accounts (Facebook, Twitter, Instagram, etc.). Do a Google search. Before you make your final decision, consider a trademark search to avoid any legal challenges down the line. If your business name is too similar to another, you may not be able to register that name when you create a legal entity. (See step 4.)
2. Choose your business address.
It’s OK to register your business at your home address, though some owners choose to use a service such as a UPS store to give their business a location separate from their home address. Keep in mind there will be situations—such as filing a tax return—where you will have to provide a business’s physical address.
3. Get a business phone number.
You may not have to get an expensive business landline from your local telecom, but you need a number to give out to clients and customers, and it should sound professional. You may be able to use a service like Google Voice or get a virtual business telephone service or answering service.
4. Create your business entity.
While it may be tempting to give it a whirl as a sole proprietor, you may be taking unnecessary risk. If your business gets into any legal hot water, your personal assets could be at risk. Also, the right entity—LLC, or S or C Corporation, for example—may offer tax advantages. It’s also much easier to create a business credit profile and eventually get a small business financing if you create a separate legal entity.
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