The Five Factors of Improving Your Business Credit Score

The Five Factors of Improving Your Business Credit Score

The Five Factors of Improving Your Business Credit Score Are you looking to improve your business credit score? A good business credit score is critical in being approved for trade credit and company financing. Similar to personal credit scores, a business credit score serves as a financial report card in determining credit worthiness. A statistic-driven algorithm derived to assess risk calculates a business’s scores based on several factors. There are five common factors used to calculate a business credit score, although you should keep in mind each credit-reporting agency has its own scoring model. The Five Factors Are: 1. Making Prompt Payments One of the most important factors is paying bills on time. For the best credit score possible, be sure to pay invoices before the due date. The sooner payments are submitted, the better the impact it will be on your business credit score. 2. Creating Positive Trade References Positive payment experiences with suppliers, vendors, or business partners can have an important impact on your business credit ratings and scores. Not all vendors and suppliers share data of payments with business credit-reporting agencies, but you can add trade references to your company’s Dun & Bradstreet (D&B) credit file. If you didn’t know this before, it takes a minimum of three trade references to generate a Paydex® Score with Dun & Bradstreet. 3. Maintaining a Low Credit Utilization Ratio A company’s credit utilization ratio is the percentage of the company’s available credit used. It is calculated by dividing a company’s total outstanding balance on all credit cards by the sum of each card’s limit. This ratio plays a very...
Why It’s Important to Forecast Before Opening a Business

Why It’s Important to Forecast Before Opening a Business

Are you planning on opening a business? Have you created a plan and really written out a budget and forecasted sales/expenses? This is an extremely important step to improve the probability of the success of your business. I have recently seen the frustrations that have arisen because a business owner didn’t really sit down and look at the cash flow that would be needed to cover the known monthly expenses. And as anyone knows who starts a business, there are often unexpected things that can pop up and have an impact on profit. It’s important to write down known expenses and estimate the income that will be generated once the business opens and how much cash will be available to pay the bills that will be due including rent, operating costs, financing fees, materials, and more. And often it costs much more than estimated to actually get the business open. If in an industry that needs a permit, it may take weeks or months to get approval, and in the meantime, rent is due on your space. Improvements on the property can also take longer than originally planned meaning your open date is pushed back later than planned. Look at businesses in your industry to see average profit margins. Then because new businesses usually aren’t as profitable as established businesses, reduce the expected income and increase expected costs. Will you be able to cover your monthly expenses with the income generated from the business? If not, what you can do to reduce them? Perhaps it’s finding a different location where the rent is less. Or finding other vendors who can provide...
How to Prevent Over-Payment of Unemployment Claims

How to Prevent Over-Payment of Unemployment Claims

Did you know incorrect payments of unemployment insurance (UI) benefits can be costly for your business? Over-payment of benefits can be charged to your account and alter your UI reserve, requiring a larger tax rate in a subsequent year. But rest assured, you can avoid this by looking out for the UI notifications from your state agency and replying to them quickly. What are UI benefits? Unemployment insurance is a program created to provide eligible workers, who are unemployed due to no fault of their own, with temporary financial assistance. Some examples for why an employee has been let go that would quality are: reduction of hours/ staff or if an employee is not the right fit for the position. The individual must have received enough wages during their base period, be physically able to work, and be actively looking for work in order to apply for benefits. Incorrect over-payments of UI benefits happen when an employer or former employee provides the wrong payroll information or neglects to provide the information on time. When this happens, former employees might collect benefits that they should not receive. How to prevent over-payments: When a worker leaves your company, give correct and complete information regarding the separation. This can help prevent over-payments and can save you from going through the appeals procedure. Respond as rapidly as possible to requests for proof of the employee’s weekly pay amount. Report new hires to your state agency within the required number of days (usually 10-20 days) to prevent collecting benefits while working. If an employee does receive more UI benefits than he or she should,...
How to Account for Loss when Disaster Strikes: Part 3

How to Account for Loss when Disaster Strikes: Part 3

In the first post in the series, we discussed accounting for losses and in part 2 we shared information on calculating payroll in the event of a disaster. To review the information, you can click here to visit part one (http://bit.ly/2g7DZxQ) and part two: (http://bit.ly/2x3T9et). Today’s post will go over filing taxes and reporting insurance proceeds. Extending Tax Deadlines After a major disaster, the IRS will automatically extend tax deadlines for individuals and businesses in the affected areas. Typical extensions vary based on the severity of the disaster and the type of tax. For income tax returns, the extension may be several weeks or months. For payroll tax deposits and information statements, the extension is generally only a few business days. Note that an extension of time to file may not include an extension of time to pay. You should continue to make estimated tax payments as close to your usual schedule as possible to avoid additional interest charges. If a major disaster disrupts your business and you are outside of the federally declared disaster area, or some other event, such as a fire, affects only your business, you may also be eligible for relief. Visit the IRS website or speak with your accountant to learn how to apply for an extension or to have penalties abated. Reporting Insurance Proceeds The exact accounting treatment of insurance proceeds depends on the nature of the policy and when payments are made. However, there are a few common themes. Insurance proceeds should be reflected on your financial statements. Even though insurance isn’t a typical revenue or expense, it’s still important information. Insurance...
How to Account for Loss when Disaster Strikes: Part 1

How to Account for Loss when Disaster Strikes: Part 1

With the most recent natural disasters happening around the world, worrying about how you can prepare and protect your business may be weighing heavily on your mind. You can find out what accounting steps to take in the event a disaster with information shared from CPAPracticeAdvisor.com. When a flood, fire, hurricane or other disaster strikes your business, you may suffer heavy property damage along with lost sales during the time you’re forced to close. Having a good understanding of the accounting rules related to natural disasters can help you fully account for your losses, reduce the economic harm to your business, and obtain financial relief through insurance, tax deductions and other sources. Accounting for Inventory Losses Conduct a manual count of your inventory as soon it is practical to do so. Even if items are obviously a total loss, it’s a good practice to document the specific losses due to the disaster versus what you might have lost due to shrinkage or some other means before the disaster. This may also help with the insurance claims process. You will need to update your balance sheet to reflect the current value of your remaining inventory. You can generally include inventory losses as an expense when you prepare your financial statements and file your tax return. However, you will need to adjust for any insurance reimbursements — you cannot both claim a loss expense and exclude the insurance claim from your income. Accounting for Property Damage Damage to other assets, such as buildings or machinery, is handled in a similar manner to inventory. If the damage is so substantial that it...
New E-Verify Poster Published

New E-Verify Poster Published

Do you use the E-Verity program in your workplace? If you do, then you need to update the mandatory poster in your workplace. Recently, the federal E-Verify Participation poster has been changed by the U.S. Citizenship and Immigration Services agency (USCIS). The following information has been shared by ePlace Solutions, Inc. Who must post the E-Verify Participation poster? The following employers are required to post the E-Verify Participation poster: All federal contractors All employers in states that require the use of the federal E-Verify program All employers that voluntarily participate in the federal E-Verify program. Where should it be posted? In a conspicuous location in the workplace. What changed? There were several changes made to the E-Verify Participation poster: The poster layout was redesigned The language was revised to make information more clear and understandable. The English and Spanish versions are combined on one post How do I get the poster? The USCIS has only a sample poster available on its website. Employers can only download the official E-Verify Participation poster by logging into the E-Verify program. Recommendations? All affected employers should update the E-Verify Participation poster immediately. As sample poster is available here. This article was written by Laurian Rutterbush on the ePlace Solutions, Inc....

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