In the world of personal credit, bankruptcy is a stain on credit report that causes financial problems, especially while acquiring a loan and looking for a new job. If you are planning to start a business just after you have filed for bankruptcy, you have to move a fresh start and establish a credit profile for your business. You must formulate your habits and introduce new ways to manage your business affairs.
So let us here take a close look at some tips to start a business after bankruptcy.
- Firstly, you have to create a new business plan. Make sure, the business plan you create includes the reasons behind starting a business, the need for service or product, competition, marketing plan, financial plan, location of business, and how the company will be operated. After creating a business plan, ensure that your planning is sufficient for funding. Before creating a plan, you may refer some sites that give you a good example of what a standard plan should be like.
- Then visit the website of your secretary of state and perform a search for your business name. Make sure the name you choose is not already in use. Decide on a corporate structure, like whether it will be a sole proprietor, corporate, or limited company. Fill out the application form of your secretary of state’s website in order to incorporate your business.
- The next step is to get an employer identification number form the Internal Revenue Service. Fill out an SS-4 form and submit it to the IRS. The IRS will then issue an EIN after they receive the form. You can also contact the IRS over phone and read off the entries on your SS-4, and the representative will issue you an EIN over the phone. The IRS website also has an online EIN assistant that allows you to file an EIN online and receive the number instantly on the internet.
- Establish credit for your business that is referred to as “trade lines”. Trade lines are accounts that report to the credit bureaus, which results in your credit scores. The best way to start business credit is with gas cards or retail store credit cards as they are easy to establish and will appear on your credit report. Use your cards to your limit so that you can make monthly payments on time. Doing this, you can establish a solid business credit rating n as little as six months.
- Finally, go to the Small Business Administration website and find out the contact information for your local SBA representative. The SBA site is also helpful to locate lending institutions with SBA programs. SBA does not lend money to businesses, but if you have a business plan, it can direct you to loan programs that best suit your business.
In conclusion, if you want to set up a business just after filing for the petition of bankruptcy, it is advisable to bear the above mentioned tips in mind.