August 2021 Q and A

QUESTION:

How can my business build a credit score?

ANSWER:

If you haven’t already opened a business bank account, do this first. Next, apply for a business credit card. Although you may have to personally guarantee it, having a credit card in the company’s name will start to build your corporate credit history.

Ask your vendors whether they report payments to business credit bureaus. If they don’t, consider doing business with vendors that do. Then review your company credit report as you would your personal report, and correct any discrepancies.

QUESTION:

How do I know if I should be making estimated tax payments?

ANSWER:

Because the US uses a pay-as-you-earn tax system, you must pay your tax bill throughout the year. Generally, if you work a W-2 job, have a reasonable amount of tax withheld from your pay, and have no other significant source of income, estimated tax payments aren’t necessary.

Estimated tax payments are needed if you have self-employment income because you have no paycheck to withhold tax from. Also, if you have significant amounts of interest, dividends, alimony, or capital gains, then estimated payments may be necessary. Speak with your tax professional who can let you know whether you should be making estimated payments.