ABC’s of Building Corporate Credit, Part 1

The most important thing in building corporate credit is to be methodical and do each step in order. This is not a magical process but it will take time to build a strong profile.
If you do this correctly you won’t need to use your personal credit or personal guarantee.
Let’s go over the ABC’s.

A ) You need to choose a name for your business, preferably a name that reflects what you do. Once you have a name picked out you will need to do a search to make sure that it isn’t already registered. This search can usually be done online at the Secretary of State’s website for your individual state. Make sure when choosing the name that it is distinctive enough not to be confused with other similar names. When you do your search at the Secetary of State website they will tell you if your name is available. If your name is to similar they will make you choose another name. You will definitely will have to obtain a physical commercial address, using your home address or P.O. Box will hinder your ability to build the business credit you want.
In addition you don’t want to use a UPS store or a virtual office you got from the internet. These type of addresses are viewed as high risk, you don’t want to get red flagged right at the start.

Once you have your name the next decision is on what type of entity you will form. The main choices in the US are, an S-Corporation, C-Corporation or a LLC Limited Liability Company. You should check with an accountant and or lawyer who have expertise in this area to help you decide the best one for you. Here are some links to the SBA website which may be of help.
http://www.sba.gov/smallbusinessplanner/index.html
http://www.sba.gov/smallbusinessplanner/start/chooseastructure/index.html

B ) Get your Tax ID# or EIN from the IRS. If you feel a little overwhelmed by the process you can use a company such as Corporate Credit Concepts to help you. Some companies will obtain the number for you some may not just check with them to make sure. This is the IRS form to fill out to obtain the EIN, https://sa1.www4.irs.gov/sa_vign/newFormSS4.do.

C ) Now it’s time to get your seperate business phone line. When you get it you will want the business address you obtained to be associated with the number. This phone number needs to be listed in the 411 business directory so people and lenders can verify it. In addition get listed in the http://www.superpages.com. Don’t use your cell phone or home phone. When you get your new number the phone company will ask if you want the address listed and you will give the physical address you got in the last step. The actual phone line does not need to terminate to the real physical address. You can use what is called remote call forwarding the phone company can explain this to you. The goal is to look like an actual business.   

D ) OK, Now you have laid the groundwork, make a few calls on the new phone line and most importantly when the bill comes pay it in full and do it promptly. You are now ready to build some credit.

I will continue the steps in the next post.

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