As a small business owner, one of the things that you have to work on is building credit. Since you won’t have as much capital as larger enterprises, you have to use your credit wisely so that you can not only keep your business running smoothly, but expand and grow as possible. One of the crucial elements needed for building credit is an EIN number. Let’s go through the process and how it works.
Getting an EIN
If you are a corporation or if you have employees, it’s essential to have an employer ID number (EIN) from the IRS. This will allow you to establish your enterprise as a separate entity from yourself, which can give you much more flexibility when building credit.
To get this number, you can go to the IRS directly or use a third-party EIN filing service to handle the paperwork for you. In most cases, you can get your number in a day or so, and you can start using it right away.
Building Credit With an EIN
Once you have your ID number, then the next step is to open a business bank account. You will want to open a checking and a savings account because this will help you establish more credit in a shorter period.
Along with your EIN, you should apply for an ID number from Dun & Bradstreet. This company is the primary resource for businesses looking to build credit, and it can help you immensely. Having both an EIN and a DUNS number will make this process much easier in the long run.
Create a Credit History
One thing that you will want to do is take out a small business loan from your bank. You can use your savings account as collateral to do this. Additionally, you will want to put all of your business expenses (i.e., phone bill, vendor payments, etc.) on your EIN and DUNS number.
Doing all of this will establish a credit history. As long as you make your payments on time and in full, it will give you a lot more leeway in the future. The longer you’ve been doing this, the more money you can borrow against.
Building credit for your business is somewhat complicated, but it’s an essential part of your success.
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