How To Establish Business Credit

Learn step-by-step how to establish business credit

When it comes to business credit, most business owners do not realize the benefits. One of the biggest benefits of business credit is that it is entirely separate from your personal credit. However, to be able to leverage the many advantages business credit has to offer, your business needs to have a solid foundation. A solid business foundation includes entity formation, bookkeeping, and an active business bank account.

The first step in building a solid business foundation begins with the formation of your entity. The most common entity types are Limited Liability Company (LLCs) and Corporations. When you first start your business, it is important to register your business, apply for an Employer Identification Number (EIN), and apply for a DUNS number. Your EIN is a number similar to your social security number. It is how the IRS identifies your business. Your DUNS number is how your business is identified with the credit reporting agency Dun and Bradstreet.

Another important step to take before applying for business credit is to set up proper bookkeeping for your business and open a business bank account that can be linked to your bookkeeping software. Having proper bookkeeping in place will make it easier for you to prove that your business has adequate cash flow. Similarly, a business bank account separates your business expenses from your personal expenses which to accurately prove profit and loss  

Next is to establish trade lines with your suppliers. If you buy supplies, ingredients or other materials from third-party vendors, those purchases could help build your business credit. Many suppliers extend trade credit, which means they allow you to pay several days or weeks after you receive the inventory. If you have this type of accounts-payable relationship, ask your supplier to report your payments to a business credit bureau. Your business credit score will get a boost as long as you stick to the terms of the trade agreement.

You need at least three tradelines to get a Dun & Bradstreet Paydex score, which measures past payment history. Even if you don’t work with a lot of suppliers, you can set up tradelines with any small vendor, such as your water or office supplies distributor. If those vendors don’t report to a credit bureau, you can list them as a trade reference on your account, and Dun & Bradstreet will follow up to collect your trade data.

A business credit card can be one of the best tools for building business credit. Additionally, many business credit cards offer benefits and rewards for your spend, from cash back to travel points.

If you have thin or poor personal credit, you may want to begin your card search by improving your personal credit score, since many card issuers will use your personal history to evaluate creditworthiness. If that isn’t possible, applying for a secured credit card will likely be your best choice.

While secured cards typically don’t offer rewards and may have a low ceiling for how much you can spend, they can still be valuable for contributing to your business credit profile. And some issuers will allow you to upgrade to an unsecured card if you can demonstrate a consistent pattern of responsible repayment.

In conclusion, having a good foundation for your business is the key to being granted business credit. Once given, you can then leverage your business credit to scale your business. If you need help building your business’s foundation, apply to become a client of Fola Financial!



Hey FOLA Fam,

We hope you’re enjoying financial literacy month!

Along with budgeting, another important aspect involved in mastering financial literacy is investing. According to Merriam-Webster, investing is the process of committing your money in order to earn a financial return. Investing is an important step to take toward cultivating your financial future.

Before investing, it’s important to assess your goals and timeline. Ask yourself the following questions: why am I investing and are my goals short-term or long-term? Assessing your investing goals and whether those goals are short-term or long-term is important because there are risks involved in investing. For someone with short-term goals, it’s important to invest in less risky options such as bonds. However, a long-term investor with a higher risk tolerance may choose to invest in riskier options such as stocks.

After assessing your risk tolerance, the next step is to open an investment account. If you’re a full-time employee and your employer has a 401(k) plan, this would be a great place to start because most employers match the contributions of their employees up to a certain percentage. As of 2022, the max amount that can be contributed to a 401(k) plan is $20,500. If you’re not an employee, your employer doesn’t give you the option to invest in a 401(k) plan, or you have maxed out your 401(k) plan for the year, you can open a Roth IRA account. As of 2022, the max amount that can be contributed to a Roth IRA account is $6,000. However, something to note is that the max contribution amount for each of these investment accounts increases for investors 50 and older.

Another important aspect to consider when beginning your investing journey is diversification. A common saying in the investing world is “don’t put all your eggs in one basket.” Diversifying your investments reduces your risk. A good way to diversify is by investing in mutual funds and exchange-traded funds (ETFs). Investing in mutual funds and EFTs is also more affordable than investing in individual stocks and bonds.

In conclusion, along with budgeting, investing is an important part of financial literacy. Investing can be a major step toward cultivating your financial future!


14 Questions to Ask Your CPA

Before your consultation with your CPA, it’s important to think about the specific questions you would like to ask them! Your family at Fola Financial put together a list of 14 questions to help you get started! Reference the image below, or click to download the PDF for your records!

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Budgeting 101

Hey FOLA Fam,

Welcome to FOLA Financial Literacy Month!

To kick off financial literacy month, we wanted to talk about one of the most important concepts in the personal finance community, budgeting. When it comes to budgeting, like most things, there isn’t a one size fits all technique. Personal finance is exactly what it says it is, personal. Therefore, it is important for those embarking on a personal finance journey to find the budgeting method that works best for them. In the personal finance community, there are four main budgeting techniques used by most people within the community: envelope system, 50/30/20, zero-based, and pay-yourself-first.

Envelope System

The envelope system of budgeting is a form of budgeting that focuses on the use of cash. You set up envelopes for each of your spending categories. For example, you would have a different envelope for groceries, gas, rent, utilities, etc. In each envelope, you would have the amount of cash you have budgeted for the respective category. Once the cash in the envelope is gone, you have no more to spend for that category until your next pay period or the next month, whichever you prefer. Most people in the finance community use the envelope system for categories they tend to overspend in, such as entertainment.


50/30/20 is the budgeting technique that states you should allocate 50% of your income to your needs, 30% to saving/investing, and 20% to wants. However, those in the personal finance community who use this technique of budgeting adjust the percentage categories to fit their lifestyle. For example, instead of using 50/30/20, you might decide to allocate 70% of your income to your needs, 20% to saving/investing, and 10% to your wants.


When using zero-based budgeting, you give all of your income for the pay period or month a job.\Whatever amount of income you receive will be allocated to something to the point where when you are done budgeting, there is nothing leftover. This is a great budgeting technique for beginners who start their personal finance journey not knowing where their money goes. With this technique, you will know where every dollar you make is going.


The pay-yourself-first budgeting technique’s main purpose is for you to allocate money to your savings, debt, or investing before you start paying your bills for the month. Once you pay yourself first and pay your bills for that period, the rest of your income can be used for whatever you want. Along with zero-based budgeting, this technique is one that is widely used by beginners within the personal finance community.

Start your April off with a bang by taking the FOLA pledge and joining us for FOLA Financial Literacy Month! To begin your personal finance journey, explore each of these budgeting techniques and find the one that works best for you and that will propel you into financial health.


Do You Need To File 1099s?

Did you pay any contractors during the 2021 tax year ? If so, you may be required to file a form 1099.

Form 1099 filings are due for any person or business to whom you have paid the following during the year:

  • At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
  • At least $600 in:
    • Rents (box 1);
    • Prizes and awards (box 3);
    • Other income payments (box 3);
    • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
    • Any fishing boat proceeds (box 5);
    • Medical and health care payments (box 6);
    • Crop insurance proceeds (box 9);
    • Payments to an attorney (box 10) (see Payments to attorneys, later);
    • Section 409A deferrals (box 12); or
    • Nonqualified deferred compensation (box 14).

The 1099-MISC Form is due  by Friday, January 31, 2022

Please note that if you do not issue 1099’s timely you will be at risk of incurring penalties and fees.

Fola Financial has a quick 3 step process to help you get your 1099 forms filed and delivered to your contractors on time!

Step 1: Complete the 1099 Intake form

Step 2: Complete & Submit the Fola Founder’s Contractor Worksheet Spreadsheet Sent to you

Step 3: We will E-File your 1099’s & E-Deliver it to your Contractors for you

Remember, the deadline to file is January 31st, 2022! Don’t delay and click below to get started!


The Cost of Being Your Own Boss

The Great Resignation has resulted in many former employees considering or becoming their own boss. While this shift in one’s title is a level up in many ways, it comes with an increase of responsibility when it comes to paying taxes that many people aren’t aware of. This additional responsibility can actually provide benefits that W2 employees cannot take advantage of.

Let’s review some things that everyone should know if they want to work for themselves.

Tax Payments

  • Self-employed people receive compensation that does not withhold their required tax payments. Instead, they are responsible for paying quarterly estimated taxes on their income. Due to this, it’s important to track monthly and quarterly income and set aside money for tax payments.
  • Instead of receiving a W2, the self-employed receive a Form 1099 from each entity that has paid them, this document details the amount they have earned. Making accurate quarterly estimated tax payments throughout the year can reduce tax liability at the end of the fiscal year.
  • Self-employment taxes are 15.3% of earned income, of which 12.4% goes toward Social Security and 2.9% goes toward Medicare.

Tax Savings

  • Self-employed people benefit from being able to claim deductible business expenses on their taxes. They can write off half of the self-employment levy, phone bills, internet expenses, costs associated with a home office, and more.
  • Self-employed people are eligible to open a simplified employee pension plan, known as a SEP IRA. Through this plan, 25% of net earnings from self-employment can be saved.
  • Health insurance premium payments can be claimed as a tax deduction for the self-employed.
  • Entrepreneurs with businesses filed as pass-through entities, including S-corporations and LLCs may also benefit from the 20% qualified business income deduction that is subject to limits based on income level and industry.

Of course, everyone’s individual situation will vary, which is why speaking with a CPA can help you to create a plan that will help you plan your tax strategy before tax season even begins.

If you recently made the transition to being self-employed and want to prepare for the upcoming tax season, consider scheduling a consultation call with Fola Financial to learn more about how our services can help you to create a smart tax strategy and reduce your tax liability. Click here to get started!