How to Establish Credit for a New Business
When starting a business, it can be beneficial to create a distinct credit profile apart from your personal credit.
Other People Are Reading
Instructions
-
How to Establish Credit for a New Business
-
1
Protect your personal assets by forming a Limited Liability Company (LLC) or Incorporating. You can build your credit profile by having a separate entity and position yourself for the benefits accompanying a LLC or Corporation.
-
2
Apply for a Federal Employer Identification Number (FEIN), which identifies a business in the same way that a Social Secutiry number identifies individuals. When registering your business with federal or state agencies, a FEIN is required.You can apply online at irs.gov (the IRS website), call 800-829-4933, or by mail. If you choose to apply via mail, download Form SS-4 from the IRS website and mail to the address on the form. After completing the form, be sure to sign and date.
-
-
3
Keep your personal and business finances separate by opening separate bank accounts.
-
4
Comply with your state’s business laws by obtaining the necessary permits, business licenses and other documentation required to do business your area.
-
5
Apply for business lines of credit and/or credit cards. Some companies/creditors will give credit to new businesses without a personal guarantee requirement and through various credit agencies will update your credit profile.
-
1
Tips & Warnings
When applying for credit, lenders will evaluate your repayment ability, the loan’s intended purpose and your character (whether they see you as a trustworthy borrower).
