Enhancing Your Business Credit Score


You could be a viable resource in helping clients improve their credit scores in order to stabilize their business’s financial standing.  To provide them with the input they need to truly improve that all-important number, you need to be informed yourself.

If your clients have established a business line of credit with suppliers and/or credits and have a positive history paying their bills, they are probably interested in applying for a business credit card of a small-business loan, if they haven’t already. This is always a good opportunity to better manage their finances as they keep their personal and business expenses separate.  However, they may be surprised when they are denied and come to you for help rectifying the problem.  There are a few things they should know in order to better understand how their business’s credit score works.

In an Entrepreneur.com article on improving your credit, Stan Lewczyk, a SCORE counselor in California is quoted as saying, “Banks and other credit institutions look at small businesses—and particularly new small businesses—as the personal fiduciary responsibility of the owner.” In this, your client’s personal credit score is crucial in how their business is perceived by creditors.  Most small business owners with bad credit will be unable to secure business loans, credit lines and lease agreements.  You may need to first work with your client on improving their own credit scores before helping them enhance their business credit scores.

In an article on AllBusiness.com entitled “7 Ways to Maximize Your BusinessCredit Score,” Marco Carbajo suggests a few surprising tips on improving a business’s standing with all three major business credit bureaus.  In this article we’ll share some of which many may be unaware:

Pay invoices 20 days ahead of time. Some are unaware that paying this far ahead of a due date can classify a business as one that pays ‘better than terms.”  This will definitely enhance a business’s credit rating.

Establish payment history. You can’t establish a credit history if you buy on credit once every few months.  In order to demonstrate your ability to manage credit well, you need to make regular purchases and pay those bills in a timely manner.

Add trade references.  There may be some vendors that your clients regularly pay that are not listed on their files; they can easily be added using DNB’s (Dun & Bradstreet) trade reference builder program.  Carbajo explains, “By adding just a couple of additional trade references with years of payment history you can dramatically improve your business credit score.”

Increase credit limits. If your client has a good history with a supplier or creditor and is using a significant portion of their current credit limit, they can ask to extend that limit for an enhanced credit score.

Diversify credit types. Carbajo says this tip is one of the most important factors in enhancing a business credit score.  When working with clients, ensure that they diversify their credit types: trade credit, revolving credit, lease credit, lines of credit, etc.

Manage Your Clients’ Tax Needs as Well as Their Accounting

Why stop at providing your clients with accounting services? Acquiring tax preparation skills not only affords you the opportunity to earn upwards of $100 per hour, but it exposes you to a limitless potential client base.  The fact that nearly every adult in the nation must report their tax liability on a yearly bases means that your tax preparation skills will be very appealing to a significant population.  And as your practice grows, so will your income.

UAC’s Professional Tax Preparer (PTP) program will enable you to become proficient in the completion of individual and business returns.  The PTP is comprised of the following 4 modules with their corresponding topics:

Module I establishing the Tax foundation

  • Getting Started
  • Wages, Salaries, & Tips
  • Schedule B – Interest/Dividend Income
  • Schedule C-EZ and Schedule F
  • Schedule D-Capitol Gain (or Loss)
  • Retirement Income
  • Schedule E – Income (or Loss) from Rental Property/Royalties/partnerships/SCorporations/Trusts
  • Other Types of Income
  • Occupational Adjustments
  • Educational and Personal Adjustments

Module II Becoming the 1040 Expert

  • Standard vs. Itemized deductions – Part A: Medical/Taxes
  • Schedule A – Part B: Int/Char/Theft
  • Schedule A – Part C: Job/Misc.
  • Calculating the Tax
  • Non-Refundable Credits – Part A
  • Non-Refundable Credits – Part B
  • Other Taxes
  • Payments & Refundable Credits
  • Closing the Return

Module III Profitable Business Returns

  • Business Entities
  • Tax Elements in Accounting
  • Financial Components
  • Dispositions of Business Property
  • Schedule C
  • Form 1065
  • Form 1120
  • Form 1120S

Module IV Building Your Successful Tax Practice

  • Getting started Right
  • Effective marketing
  • Comfortable Interviewing Techniques
  • Profitable Fee Calculations
  • Always the Expert Preparer

Expand your practice and diversify your offerings.   Enroll in the Professional Tax Preparer Program today!

ResourceCarbajo, Marco.  “Business Credit Builder: Dun & Bradstreet Product Review.” 27 Jan 2010 Business Credit Insiders Circle.Carbajo, Marco.  “7 Ways to Maximize Your Business Credit Score.” 29 July 2010 AllBusiness.comMueller, Karin Price.  “How to Improve Your Credit Score.” 3 June 2010 Entrepreneur.com

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