Step I. Have a business that can apply for its own tax identification number. This number is vital to successfully building your business credit profile.

Step II. Incorporate Your Business; as a business owner you need to protect your personal income, savings, home equity, all assets from the business. You also need to separate your personal credit completely from the business credit. You can do this by legally forming either a Corporation or Limited Liability Company. Many people
think that just because they are a single person or family, rather than a large business, that incorporating is not for them. Incorporating can offer you and your business many advantages.

Many added reasons that could make all the difference for you. Some of those reasons are:

 Control and management of a corporation is very structured and
clearly understood. Losses by S corporations can be deducted personally.
Real estate can be controlled within a corporation for the ultimate in asset protection.

 Some expenses that used to be personal expenses can be paid by a corporation, including your car, education, legal and accounting fees, insurance, moving expenses, seminars, books, meals, entertainment, travel, computers, office equipment, and much more.

 You do not need to be a trained corporate lawyer to quickly incorporate your small business. One company advertises "answer a few questions online. We will prepare your documents within 48 hours and file them with the proper government agency.

 Their package will give you the following needed items:
Incorporation forms required for Federal tax ID assignment, Corporate Minutes, Annual Reports, Trademarks, Copyrights, Patents, Logos, Amendments, Limited Partnerships, State Tax ID.

I. Licenses
You must obtain a business license and usually a tax resale license in the state and possibly county or city of where you are operating your business. These items are critical to building a business credit profile.

II. Financial accounting documents & tax returns:
The business should have financial statements and tax returns. Ideally, the financial statements will include a balance sheet and income statement for each of the last two years. The choicest method for this is to have a CPA prepared financial statements for credibility. The Tax Returns for the previous two years should also be prepared and filed with the IRS.

If you have a business less then two years old, just make sure you have up to date financial statements and have filed any necessary tax returns. Begin building your financial statements from the day you start the business and continue this process faithfully for maximum results.

The biggest problems most home based business owners have with taxes is that they loose too tax advantages by not claiming many fully legal deductions.

The biggest deduction losses are they don't claim depreciation or the full extent of their expenses that are required to use part of their home for their office, or manufacturing operation, or warehouse space - or perhaps a combination of all three. The IRS defines legitimate expenses as those that are "ordinary and necessary" for carrying on trade and business.

Make a list. Maybe you're just starting out as an independent contractor or small-business owner. The best advice to help you claim the maximum tax deductions your business is entitled to claim is to make a list of legitimate expenses.

Look around your office, carefully go through your check book, scour your budget, and compute expenses from a recent business trip. Think which items fit into the heading of "ordinary and necessary." Compile a complete list of your expenses and employees' so that no deductible expense will slip through the cracks.

Don't overlook used items. "You don't have to buy something new to deduct it from your taxes," an IRS counselor says. If you're starting up your own business, you have the right to deduct anything used to conduct business. This can include a lamp, sofa, or a desk, you use for business purposes.

Getting a home based business off the ground can be stressful enough in itself. Itemizing employees used for day labor or temporaries, or the CPA who does the accounting balance statements etc you can claim deductions you are entitled to claim. Costs of the internet and other similar expenses can quickly add up. Therefore your home based business can receive the tax advantages needed to become a niche in your marketplace.

III. Bank References
Your business must have a minimum of one bank reference. It is
Important when starting a new business to select a bank you want to partner with
for as long as you operate your business. The longer the relationship you have with your bank the more willing they will be to extend credit. It looks very favorable to credit bureaus when you have been with one bank for the whole length of your business.

IV. Trade References
The business is going to need trade references that have given you a credit account and report your credit history to the business credit reporting agencies. This can be one of the most difficult steps in the credit building process. Once you have established favorable trade references by paying your bills on time, there are many lenders and retail credit card companies that will extend credit to you.

Don't try building business credit without getting all the information. Making mistakes during the startup phase can cause your business to be placed into the "high risk" or "red flag" status with credit bureaus and can mean you can lose your chance at keeping or ever receiving credit.