Know Your National Credit Report

 

Getting an annual credit report from one of the three national credit reporting bureaus has been likened to getting an annual physical check-up. Some people consider it as something that can be put off until later, but it is highly important to get a national credit report. Internet technology has facilitated the process of getting a credit report today in comparison to the past when it was an annoying inconvenience. A national credit report can prevent financial problems from happening or from getting worse if they already exist. It is important to know your credit report for various reasons including the following.

 

Helps You to Successfully Apply for Business Credit

The main purpose of a national credit report is to show the quality of your credit life and to review how your finances are organized because the details of how you pay your bills goes on your credit history and stays there for many years. Many financial companies make their judgments based on this report. Your credit report should be an asset when looking for a new house, a new job or when trying to borrow money. It will be one of the things that your potential creditor will consider for example if you want to re-mortgage your property or when applying for a mortgage. The information is also important when it comes to applying for loans, home insurance and automobile insurance. Your credit report is considered as one of the main factors that help financial institutions make the decision whether you can underwrite your potential debt or if they can lend you money. You can apply for business loans successfully if your credit history is good and it is therefore important to check it regularly so that you can work on repairing it if it is not good.

 

Allows You to Be Aware of Any Obstacles or Conflicts in Your Credit History

Many financial activities take place within the course of a year and it is for this reason that keeping track of your credit score a number of times is essential. Some people use technology to commit identity theft and fraud. By checking your credit, you will be able to know about your credit history throughout the year. Errors on credit reports can affect and offer misleading information about your financial status. You might find inaccurate information in your annual credit report even if you are sure of your certain financial dealings. By knowing your national credit report, you can be able to find any mistakes of the report and fix them immediately.

 

Help Tell Whether You Have Been A Victim Of Identity Theft

Your credit report is also an exceptional indicator that can show whether you have been an identity theft victim. If you have given your Social Security number or other personal information to certain organizations, an authorized person can get credit cards or loans under your name if he or she has this personal information. Fraudsters often do this and go on a spending spree using your information and rack up debts in the process. You will mostly realize that you have been a victim of identity theft when you need certain financial services. Situations of identity theft can take a lot of hard work and time to rectify in addition to requiring additional payments for credit repair benefits. This is the reason why you should check your credit regularly to prevent such situations from becoming worse or affecting your credit negatively.

 

Gives You Financial Peace Of Mind And Confidence To Apply For Credit

Knowing your national credit report will also help you by giving you financial peace of mind, for you will know that everything on the report is yours. You will be able to see your progress if you are working to improve your low credit score. If your credit rating is good, you will be confident enough to apply for loans and other financial services.

How to Establish Business Credit: Tips and Advice

 

This article will discuss how to establish business credit when there is no history at all. This is mostly the case when a new business is opened and naturally the business has not had any credit accounts.

 

How to Establish Business Credit: Federal Tax ID
The first step in how to establish business credit would be to apply for a federal tax id number. This separates your personal credit from your business credit with the Internal Revenue Service and state tax agencies. You will also need to have a federal tax id number when you want to open a business checking or savings account. You will also need to secure the proper licenses and permits in your local area in order to do business. Obtaining these licenses registers you with the proper agencies in your area and establishes your credibility with your community.

 

Personal Credit Protection
Protect your personal credit identity by incorporating or establishing an LLC. Insurance from liability is very important so that only your business is on the line and not your personal assets in the case of an unfortunate lawsuit. Also, by establishing a corporation or LLC, you are creating an identity in order to begin reporting on your business credit file.

 

Getting Business Credit
Apply for business credit. Some lenders may require a personal guarantee to grant credit. There are several credit card companies that provide credit cards specifically for the business owner. American Express is a company that caters to the business owner, and usually will provide large credit lines. The importance of not carrying a high amount of debt and making all payments on time is essential to how to establish business credit. Also, apply for business accounts with establishments such as Office Depot or Staples, as they will report business credit to the bureaus.

 

Establish a Business Credit Report
Register with business credit reporting agencies such as Dun & Bradstreet or Experian, or both. Some of these agencies may charge a fee to do so, but you can’t establish business credit if they don’t know you exist. Make sure these agencies have record of your current business credit accounts and that they are reporting them regularly and accurately. Write the agencies for copies of your business credit report annually, check your business’ PayDex score, and be diligent with correcting any errors. One small error could prevent the small business owner from making a payroll if they need extra cash in a tight month.

Figuring out how to establish business credit will seem be a slow process in the beginning, because you will most likely have to have small credit limits and prove your creditworthiness. However, if you make your payments on time, and do not borrow more than you can reasonably pay back, you will build your strong business credit profile in no time.

Accounts Receivable Finance

 

What is accounts receivable factoring/finance?

Accounts receivable factoring is the selling of your accounts receivable for cash versus waiting 30-60 or 90 days to be paid by your customer. When you provide our accounts receivable factoring company with copies of your invoices, our accounts receivable factoring company uses your invoices to make a loan to your company. It is a simple process and can be automated after the first transaction.

 

How does our accounts receivable factoring program work?

With our accounts receivable factoring program cash is advanced to your business, and an automated system is set up to repay the cash advance through withholdings from credit card transactions repaying a portion of your business cash advance every time a customer makes a purchase.

 

How much of an advance can you qualify for?

The amount is based upon your total sale volume and your past business history, not your personal credit. Our account receivable factoring program will allow an advance up to $200,000.

 

What are the benefits of our accounts receivable factoring program?

 

  1. Builds your business credit
  2. No financial’s required
  3. No collateral
  4. Easy payback process – no fixed payments
  5. Fast Funding
  6. Approvals in as little as 24 hours
  7. No up-front fees or closing costs
  8. How do you repay the advance?

 

There is no set term to pay off the advance although there is a minimum of 90 days. As goods and services are purchased by your customer, a small percentage of each credit card sale is collected from one of our preferred processing banks.

 

Do you qualify for financial funding?

  1. Are you a restaurants, service or retail business?
  2. Do you accepts credit cards as payment?
  3. Do you have six months worth of processing statements?
  4. Do you have six months worth of bank statements?
  5. How is your personal and business credit?
  6. Do you have any open tax liens, judgments or bankruptcies?
  7. Have you been operating for one year or more?

Why Companies Search Business Credit

 

There are many reasons why a company would conduct a credit search of another business. In most cases it is used to determine credit quality and the credit limits to extend to a prospective borrower. Another common reason that companies conduct credit searches is to determine trade credit terms for credit customers. Although the major reason for executing a credit search is to facilitate some type of external financing, there are other reasons why companies would require the similar business information. The following is a listing of the various reasons why companies would conduct a credit search:

 

Credit monitoring

Companies should conduct credit searches on their own business credit to determine how the market perceives their credit quality. A continual review of a firm’s business credit files will identify errors and omissions that can be fixed before they have an impact on business credit. Reviewing and managing a business credit file can help owners determine which operating strategies can be modified to facilitate business financing.

 

Customer Credit

Trade credit is one way that businesses can increase credit sales. Providing customers with a grace period before requiring cash payments allows them to gain greater control over cash flows, and to purchase more. Businesses provide trade credit because it tends to increase the entire market for their goods and services. To safeguard the business, owners must conduct detailed credit searches and identify credit risks before extending any credit terms. Any cost to conduct credit searches will be reimbursed by limiting collection costs.

 

Vendor Status

Although a firm’s vendor relationships are a source of business support, they can also provide significant business risks. A company relies on major suppliers to provide critical resources at the time they are needed. Insolvency of a major supplier can have a major negative impact on business operations, since they cannot be easily replaced in a short period of time. Many owners run credit searches on their major vendors to try and identify any financial issues before they lead to a disruption in inventories or other critical resources.

 

Competitive Review

Business strategies should be designed and executed with a firm’s major competition in mind. Effective business management includes mitigating competitive pressure, which starts with underwriting the competition and their financial health. Shrewd business owners will conduct frequent reviews of their competitive set, which often includes running credit searches on them.

 

Investment Underwriting

Credit searches are just one of the many tools that investors will use to determine a company’s value. Although lenders are more interested in a firm’s ability to cover debt service payments, equity investors want to understand a company’s ability to grow its cash flows over the long term. A credit search and a review of a firm’s business credit will provide an array of business statistics and other operating data that can be used to forecast cash flows and determine value.

Many people think that credit searches are only used by prospective creditors to determine credit quality. Since a major factor determining credit quality is a company’s ability to manage and grow cash flows, credit searches will assist anyone looking to determine the financial health of a business.

Ways To Establish Corporate Credit: Trade Terms

 

Due to the economic downturn and the tightening of the credit markets, the way that credit is supplied and acquired is changing. With the decrease in available debt capital, new approaches to financing have emerged. One method for companies to establish corporate credit is through trade credit.

 

Importance of Trade Credit

Trade credit terms that give customers a grace period before cash payment is due, is a necessary form of credit that allow companies to maximize cash flows. Credit terms like NET 30, provides purchaser what is in effect a thirty day no interest loan to purchase inventories and other supplies. With beneficial vendor terms cash flow are maximized, since increased inventory levels and operating resources can support a greater level of sales than can be accomplished when making cash purchases.

Providing credit terms to customers also benefit vendors by allowing customers to purchase more on credit than they otherwise could with cash. In the current economic environment, vendors can take the place of traditional financing institutions by extending credit terms. For example, by extending payment terms from NET 30 to say NET 60 a customer can continue to operate and earn enough money to pay for inventory at the end of the 60 days, which allows the vendor to continue a business relationship that might have otherwise disappeared.

Negotiating trade agreements is also a cost effective method of financing. With the exception of retained earnings, obtaining credit from other businesses is the cheapest form of business financing. In the current economic environment, the availability and lower cost of capital in relation to other forms of financing can make trade credit a more effective financing alternative than short-term bank loans and credit lines.

 

Establishing Corporate Credit

Trade credit also provides businesses an opportunity to establish corporate credit. Most business credit scores and other credit ratings in some way factor the timing of a business’ payments to its suppliers and creditors within the agreed upon terms of payment. For example, Dun and Bradstreet’s PAYDEX® Score, which is a unique dollar-weighted numerical indicator that represents how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors. In order to establish corporate credit a company not only needs to manage its business relationships with vendors, but must also pay its credit invoices within the period prescribed by any predetermined credit terms.

Trade credit can be provided in several different forms including: extended payment terms, quantity discounts, equipment loans, and consignment sales. The following are steps that should be considered when applying for any type of trade credit that can also help establish corporate credit:

 

Make a formal application for credit:

Every business that extends trade credit should require that their formal application, including the applicant business’ formal name, ownership, and information on banking relationships and other credit providers, is completed. In the current economy, the cost of not providing the necessary information or having established corporate credit in advance is the possibility of the application being denied, having to provide personal guarantees, or having to pay COD for inventory that would have otherwise been billed on credit.

Manage bank and trade references:

The purpose of establishing a corporate credit profile is so you can orchestrate what vendors will see when deciding on how much credit to extend to the business. : If the sponsoring company asks for your bank and trade references it means that they are planning to contact them. Not discussing your credit needs and goals with your references, or waiting until the last minute to discuss their testimonials, is a recipe for rejection

 

Check credit bureaus and other credit metrics:

Business relationships with the credit bureaus should be instituted well in advance of the need for sizable amounts of trade credit. Any errors in the bureaus’ credit reports must be fixed and any seemingly negative information should be addressed and explained in your credit profile or included in the credit application.

 

Set expectations with creditors:

Being specific about the need and use of capital will assist vendors in assessing their credit risk and help in obtaining preferred trade terms. Actual performance should be tracked against expectations and communicated with vendors. The ability to achieve what the business set out to accomplish, will increase business credibility and help enhance trade credit.

Due to changes in the credit markets businesses to rely on each other and less on financial institutions for financing. Businesses are willing to finance customers because doing so helps to expand overall market demand. However, these changes are also requiring small business owners to build the necessary business relationships and establish corporate credit far in advance of the need for capital.

Using Business Loans Responsibly with Small Business Accounting

It is generally agreed that Business loans have a useful part to play in our management of everyday business finances – but only when used responsibly and with all due caution regarding the need for the loan in the first place, exactly how much it is going to cost you, and your absolute confidence in being able to make the repayment when it falls due. A small business accounting service can help.

Of course there are likely to be times when we might all welcome a little extra cash – but there is a difference between liking it and needing it.

The need

As the government funded Money Advice Service points out, there are some things we may like, but simply cannot afford. These might include:

  • entertaining
  • tickets for concerts or sporting events
  • new work suit or new computers and software

Expenditure in the face of an emergency – such as essential repairs to your car – however, might help you avoid further costs in the future and, therefore, warrant the short-term commitment to a Business loan.

small business accounting

The cost

Some commentators make even more clear their dislike of Business loans as a matter of principle. The popular finance website, Money Saving Expert, for example, has little good to say about this form of borrowing.

But the criticism is based largely on two factors: the seemingly high cost of borrowing when measured by its APR (annual percentage rate) and the failure on the part of some lenders to conduct their business with a transparency on which customers may safely rely.

However, in the case of lenders for example, the APR might well be high but it is important to keep in mind that this APR is a reflection of the annual interest rate, including compound interest. In reality, of course, a short term Business loan is only for one day or a maximum of 30 days (with a shorter repayment term paradoxically reflecting a higher APR). The loans also include a flat fee of £5.50 to help cover the costs of the lender’s fast transfer of funds to borrowers’ bank accounts.

Indeed, Wonga make it a central point of principle that all of the information on its website and all aspects of its lending are totally transparent – whatever the tricks, ruses or deceptions that some critics may level at other lenders.

Repayment

It may seem obvious to point out that any kind of loan – including a Business cash advance – needs to be repaid when repayment falls due. Responsible borrowing, therefore, requires your 100% certainty that you are going to be able to repay your Business loan in accordance with your loan agreement – and without recourse to repaying one loan by taking out yet another one (the perils of which are discussed in greater detail in this article in Investopedia).

In sum

Provided you exercise due care and are responsible in your borrowing from reputable lenders, therefore, there seems every reason why the occasional use of short-term cash advances may play a part in normal, everyday personal finances.

How Bookkeeping for Small Business Programs Work

Save time and keep track of all bookkeeping for small business transactions as well as tax information with online bookkeeping software. Everything you need to do your business’s bookkeeping is right at your fingertips. Here is how it works.

With an Internet connection, you can access many programs. These programs link straight to bank accounts, PayPal accounts and more. You can see what your daily balances are and you can make payments directly through your online connection. You can enter daily sales and accounts receivables right online.

These programs also make invoicing faster, allowing them to be automatically generated. You do not have to worry about forgetting to invoice a vendor. The program does it for you. You can keep track of who owes your business what and you can follow up on past due accounts.

Different programs come with different features, and you will want to look for those that offer the most practical use. Avoid software that contains lots of fluffy features such as customized backgrounds and layouts. Choose software that is rich in performance features that you will actually need.

bookkeeping serviceick Books function on the double-entry method of accounting, which is better for advanced users. Look for software that is a good match for your level of accounting abilities.

Tax forms are a snap with accounting programs, and they can be invaluable when it comes to preparing your own tax returns. You can save money by doing taxes yourself instead of hiring an outside accountant.

You can do just about everything using software to prepare tax records. You can generate Schedule C’s as you enter expenses and purchases throughout the year. Employee tax forms like 1099s or W2s are also capable of being generated.

Most people are concerned about security when using any type of online program. With online accounting, this is a special concern. Programs come with read-only abilities making it impossible for changes to be made once they are entered and saved. Also, 256-bit SSL technology encrypts all data to keep it safe against potential hacks and computer viruses.

Invest time in finding a good bookkeeping program. It will help keep your records safe, help you keep track of revenue and help you prepare for taxes.

How To Survive A Tax Investigation

Tax investigations are something that many business owners may have to go through. A tax investigation is often perceived as something bad but it can also be undergone at random or if your particular industry is being targeted by HM Revenue and Customs (HMRC).

Who can be tax investigated?

A tax investigation on your business may be brought up by HMRC if you are under suspect of hiding your income or fraudulent activities. There are certain red flags that HMRC can pick up on to suspect you of omission (leaving out information about your taxes). Some of these red flags include:

  • Filing your tax returns late
  • Filing your taxes incorrectly
  • Income has dramatically increased in a short amount of time
  • Income goes up and down substantially
  • You are claiming high expenses in proportion to your income

Sometimes the tax investigations are random or can be done if you are in a HMRC target area. Target areas are industries that are known for being high-risk for tax fraud. This can be industries that regularly take cash payments or in a specific geographical area. Property income is seen as a common area for tax fraud and can often be a targeted sector.

What to do if you get investigated

HMRC will contact you by post to let you know that you are being put under investigation. When you get the letter, you should read it very carefully and if you feel that you are unsure about some of the information in the letter you should hire a professional accountant in Essex to give you support and advice.

How long will a tax investigation last?

Tax investigations are different so the length of one will vary. For aspect tax investigation, which only focus on a certain aspect of your taxes, can last from 3 months to 6 months. Full tax investigation can last from anything up to 16 months.

Can i opt out of an investigation?

You cannot opt out of an investigation. Once a tax investigation by HMRC is opened, you cannot appeal against it.

How far can HMRC investigate?

HMRC can go back as far as 20 years into your tax returns. However, they do not typically do this and will usually only go back as far as 6 years.

Penalties involved with tax investigations

In cases where they discover deliberate fraud, you will be prosecuted. This is especially true for cases where large amounts of VAT and PAYE are concerned.

In order to get through an investigation get in touch with a professional.