Small Business Taxes Archives | Page 32 of 32

Our Guide to Business Credit Scores

Do you know what your business credit score is, and how it can impact your finances?

Your business credit score is a numerical representation of the company’s creditworthiness. In other words, how financially reliable the big credit agencies believe your company to be.

In essence your credit score is a measure of your risk to lenders. It’s calculated based on your company’s credit history, payment patterns, outstanding debts and other financial data. A higher business credit score indicates lower credit risk, making it more likely for the company to secure favourable financing terms, loans and partnerships.

How does a business credit score affect your business?

Lenders, suppliers and potential business partners use your credit score to assess your company’s financial stability. The higher your credit score, the more likely it is that you’ll be able to meet your financial obligations, honour your credit and repay any loans.

So, having a good credit score isn’t just an arbitrary financial metric – it actually helps you borrow money, fund your growth and find the best customers and suppliers.

To improve your business credit score:

- Pay your bills on time – paying your bills and debts punctually demonstrates that you’re reliable and improves your creditworthiness in the eyes of lenders and creditors.
- Don’t use all your credit – keeping your credit utilisation low (ideally 30% or below) showcases that you’re responsible with your business finances.
- Don’t use multiple credits lines – taking out multiple credit cards and loans can be a red flag for credit agencies and lenders and could underline your credit score
- Monitor and correct errors – if you spot any inaccuracies (like incorrect industry SIC or ANZSIC codes), rectify these as quickly as possible to improve your overall credit score.
- Maintain long-standing credit relationships – having a longer credit history often demonstrates stability and can help to boost your overall business credit score.

How can our firm help you with your business credit score?

Being proactive about improving your business credit score has multiple benefits. Lenders will be more willing to fund your growth, potential suppliers will be more willing to offer trade credit and your bank will be able to see your financial stability and offer better overdrafts etc.

As your adviser, we’ll be happy to review your current credit report and help you find straightforward ways to enhance your existing business credit score.

The following content was originally published by BOMA. We have updated some of this article for our readers.

CARES Act Allows Employee Retention Credit for Businesses Financially Impacted by Covid-19

Under the CARES Act, enacted March 27, 2020, the Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees.

The CARES Act allowed these credits for wages paid after March 12, 2020, and before January 1, 2021. See Notice 2021-20 PDF.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), enacted December 27, 2020, amended and extended the employee retention credit (and the availability of certain advance payments of the tax credits) under the CARES Act for the first and second calendar quarters of 2021.

Was your business financially impacted by COVID-19? You could be elgibile for a employee retention credit against certain employement taxes.

Like the credit for 2020 under the CARES Act, you can get immediate access to the credit by reducing the employment tax deposits you are otherwise required to make. If your employment tax deposits are not sufficient to cover the credit, you may be able to request an advance payment from the IRS. See Notice 2021-23 PDF.

The ARP modified and extended the employee retention credit (and the availability of certain advance payments of the tax credits) for the third and fourth quarters of 2021. See Notice 2021-24 PDF for guidance on the ability to reduce deposits and, in some cases, request advances for the employee retention credit through December 31, 2021.