You've registered your business with your state! Congratulations!!! Now how do you establish business credit?
Establishing business credit can open up doors to funding and financing opportunities that weren't previously available. Business credit does not work exactly the same way as personal credit. However, it is just as important to establish and monitor your business' credit as it is to establish and monitor your own. So let's get started.
1. The first step to acquiring business credit is to establish a business.
Decide what your business name will be and check to see if the business name is already taken. Although businesses are registered in each state, for branding and legal reasons, you'll want to make sure that your business name is not already taken or in use. NOTE: An entity's name may be already taken even if it is not currently active. There are services and attorneys that can help you in verifying the availability of your business name if you aren't sure how to do this on your own. Once you have selected your business name, select your business address, phone number, website and email address. You will need this information in other steps.
2. Apply for your EIN.
This is like the social security number for your business. You can request it for your business from the IRS online. The person applying online must have a valid Taxpayer Identification Number (SSN, ITIN, EIN). There is a limited of one EIN per responsible party per day. That means the person ultimately responsible(owner or controller of the entity) for the business can request 1 EIN per day. See details on the IRS website.
3. Get your DUNS Number.
Register your business online with Dun & Bradstreet (D&B) by going to their website. Instructions are straight forward. YOU DO NOT NEED TO BUY A DUNS NUMBER. D&B will try to have you buy their services. However, there is no need to do so. NOTE: The DUNS number is what will be used to track the credit-worthiness of your business.
4. Open your business checking account.
Some creditors don't consider your business established until you have opened a checking account. Do your research to see which bank best meets your business needs. Nowadays in addition to traditional banks, there are also several online banks. To create your bank account, needed items vary based on the bank. However, it is commonly required for you to bring your Articles of Organization, your EIN letter from the IRS, the business address and phone number and any proofs of address.
5. Create & Use Vendor Accounts.
There are vendor sites that will extend credit to you as a new business. Some of these vendors are Uline, Granger and Quill. Create your business profile with these sites, review their credit terms and then buy from the vendors. NOTE: Some vendors have a minimum dollar amount and timeframe required before they will report your activity to D&B, so be sure to know what that amount is before you place your order. Once you order, your items will be sent and you will receive an invoice. TIP: Do not wait until 30 days to pay your invoices! Pay them in full and pay them early to improve your business credit score faster.
6. Get Credit In Your Business' Name
After 6 months of funding your business bank account and utilizing vendor credit to establish a credit history, your business should be getting tons of credit offers in the mail. Do your research and open unsecured and/or secured lines of credit. NOTE: Some banks will offer you business credit when you open your business checking account. Take the credit! Just be sure to use it responsibly.
For more tips and ways to establish your business credit, reach out to me directly at 914-619-7537 or email me at info@moniquenoelgunter.com. If needed, you can also purchase a Credit Set Up Package from me so that I can create the profiles for you and help you get started right.
Here's to not waiting for too late!
~Monique Noel-Gunter
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