Incorporate to Build Business Credit

In order to build business credit you must separate yourself from your business. In the United States corporations are treated similarly to people. They can have their own tax ID number, their own assets and even their own credit score. So when you incorporate your business to form a Corporation or a Limited Liability Company, it's like creating a new person or what we refer to as a new entity. This new corporate entity exists independently of you or any other person. You still own your business but you and your business are no longer seen as one in the same.

In an effort to keep your business separate you should do everything possible to avoid having your corporate entity recognized as an extension of yourself. Make sure that your personal funds and assets are not commingled with your business funds and assets. This includes abstaining from using your social security number on business credit applications. Using your social security number when applying for business credit means that you are providing a personal guarantee.