Corporate Credit and Corporate Entities
Building corporate credit is the act of establishing true and separate business credit. This means having a true and separate business entity. By forming a corporation or LLC, you can be issued an EIN (Federal Employer Identification Number) or Tax ID from the IRS. This is essentially, the social security number of your business. It enables you to open a bank account, is how the IRS will identify your entity and will become the stem of your separate credit profile.
Your Entity Options
New Business Entity – You can begin the formation of a new business entity while you perform this process. As long as you have completed the steps on the previous page Building Corporate Credit Yourself – Entity Name and you know that your entity name is ready to build credit with. The incorporation process takes a few weeks (depending on your state and their filing times) and costs start at just $149.00 plus your state’s charges.
Existing Business Entity – Companies Incorporated has an inventory of Aged Corporations and Companies that are available immediately. These are business entities that are already formed, or incorporated. This gives you a little bit of a head start. There are lenders with criteria that include how long the entity has been incorporated. Using an aged company, you open doors when applying for credit. Favorable criteria equals favorable options and rates.
Either way, you have to have a true business structure to establish business credit. Sole Proprietors may conduct business, however they are not a separate business from the owner. This means that credit granted to a Sole Proprietor is no different than personal credit, it will be the owner’s personal profile.
Your Entity Location and Addresses
You must have a legal business address that is NOT a post office box, it must be a physical location. You can use your home address, however you risk losing the opportunity to get credit from lenders who don’t fund home-based businesses. Using a mail box retail location will suffice, however those types of addresses are scrutinized by lenders who require an actual place of business for fully qualified funding. Another option is to join an office program or lease an executive suite; these types of programs give you the full feature office benefit, a toll free number, mailing address, receptionist, etc – for a fraction of the cost.
You must have your business address for the process. Companies Incorporated offers office programs in several states that provide all of the benefit of having your own business location, for a fraction of the cost.
Your Entity Phone Number
Part of your business’ identity is to have a dedicated business phone number. What qualifies as a business telephone number? One that is dedicated to your company, that is picked up “Thank you for calling [company name]…” or otherwise professionally handled. Voicemail box greetings should include the company name or business trade name in the recording. Having a true business landline through a local provider also allows you to be included in their local 411 directory assistance. Part of the business credit qualification process, lenders will attempt to locate your business through a public directory, such as 411 assistance. Cell phone and Internet (VOIP) lines can be used, however you run the risk of not being included in 411 director assistance which may lead to some creditors scrutinizing your business, and or not qualifying you for credit. Toll Free phone numbers are excellent for credibility and very cost effective. You can opt to set up an 800 Number for your business and have it listed in directory assistance and forward calls to your Internet or Cellular based business phone.
Along with your company’s domain name, a business email address should be used, rather than CompanyName@gmail, for example. Company domain based email is provided by domain providers for free, so this shouldn’t be overlooked.
Business Identity and Business Credit
As you can see from all of these steps, the objective here is to create a separate business identity from you. If you are running a business, and even incorporated, yet you have a home-based address, phone number and personal email address, you are not formally separate. So these steps create a distinct corporate identity for the purposes of building corporate credit yourself. The more you separate your business from you, the easier the business credit building process will be and more opportunities you will have with lenders. Essentially, these formalities open doors to more lending institutions and credit providers.
>> Proceed to the Next Step in Building Corporate Credit – Discussing Your Business Credit Identity >>
Last Updated on June 5, 2021