I wrote the other day about credit card signup bonuses for business credit cards. Since we’re setting up an LLC for our online endeavors and are in the process of separating our personal and business income, a separate credit card to cover expenses seems to make good sense simultaneously also start tracking its credit report to overcome the errors. But all of this got me to wondering…
How does one go about establishing credit under a new Taxpayer ID Number (TIN)? This doesn’t actually affect us directly, as we’re handling everything as a sole proprietorship, and are thus using my social security number (and associated credit history) for our new card. But what if you’re setting up a standalone entity? Presumably they’re going to run a credit check when considering your application, and it’s going to come up blank.
So what’s the best way to establish credit with brand new business? Maybe treat the new entity like a child coming of age, and get a joint credit card using your own SSN along with the TIN of the business?
A few years ago, when I was in the same boat myself (cash/debit-only until my mid-twenties, no credit history at all), I opened up a money-market savings account, used that as a security deposit for a “secured card” for the first year (it was released at that point), and paid bills off to gain good credit *and* money-market-account interest in the meantime.
Most of the “business card” sign up forms I’ve seen require both the EIN, and the SSN, and it clearly states that whoever’s SSN is given is responsible for the entire amount not paid by the company, just like a co-signer on a loan. I do think there are truly business-only cards out there where the business stands on its own as I’ve had a company card in the past for which I held no personal responsibility. I clicked on a least a couple of the cards presented in this post and they all appeared to be of the former variety.
Opps, one other thing ot think about. More and more cards with standard useful offers (e.g. 0 APR for 12 months) state in the agreement that if you default on any card through them all cards revert to default rates. My point is I think there are only a few real card companies out there and if you are like me and take advantage of the 0% APR for free money, you might want to get your company business card with another card company. That way, if you run into financial issues with your business, while you would still be personally liable for the amount due, a late payment or other issue wouldn’t cause your personal cards to default.
Just to add to what was already said, keep in mind that most cards, even if business or corporate cards are tied to your personal credit or SSN somehow.
I’ve been there, I have had corporations before, and so long as you are current on payments, no harm no foul. But even though it is through a separate EIN or corporate identity, if you missed a payment or are late, chances are when you signed for the card you personally signed for all credit obligations as well.
Bottom line is, be careful. Even though you setup a company to separate you from your business entity, chances are even though you get a “corporate” card or similar, in the event of a late payment or default you will be held personally responsible.
I’ve seen it happen before, where my personal credit is spotless, than my “corporation” misses a payment and suddenly that credit account which never showed up on my personal credit report before does show up and it shows a late payment.
Just be aware that your business accounts, even though they may legally be separate entities can still alter your personal credit.
I think Jeremy has a great point. In addition to tax advantages, liability protection is one of the primary reasons for forming an LLC. If you tie your business debts to your personal credit then you’re somewhat undoing that liability protection.
I think the best way to establish credit for a new business is utilize your relationship with your bank. If you’ve been a member for several years, they can look at the history and balances of your accounts and use that as justification in extending you a credit card. It helps if it is a smaller local bank and you’ve been a member for a long time.
“In addition to tax advantages, liability protection is one of the primary reasons for forming an LLC.”
Actually, there are no real tax benefits of an LLC in and of itself. That is, unless you opt to be treated as an S-Corp or C-Corp, your are still operating as a sole proprietor, and all income passes through to you own bottom line.
Its all about starting off with net 30 accounts, places like staples/office depot etc will extend you credit with as little as a business phone line, or faxing in some paperwork(business license, articles of corp, utility bill etc).
you also need to get a dnb number, get the free one(for grants) and add that to all applications you fill out, once you have atleast 5 tradelines reporting, you obtain a paydex ranking (always pay your bills ahead of time, not just when they are due).
You can obtain anything you want without a personal guarantee, some will say no you cant, but do you think a real corp(like microsoft, walmart etc) gives a personal social security number to obtain lines of credit(not like they need credit but think about it)..
creditboards.com in the business section is a great place to start to learn, I have been reading there for a long time, and have alot of credit without any pg..
You can even get vehicles without a pg (takes time to build it up for the better lines, but staples and other net30 accounts are very easy and help establish your business)
Hope that helps some, to those who want to bash, you just are not in the know on this one. =)
Wow, I am so excited I stumbled over this webpage. It came up on my google search. Everything I have read on this webpage is terrific. Just a few days ago I was gonna pay $300 to get a company to help me find these creditors that relied solely on a TIN. Thank all of you for helping us new business owners find this information for free. Alot of time and money has been saved for your contributions. I too, hope to contribute in the near future. GREAT JOB. Keep it up!!!
I had a cleaning business in 2002, however I’m no longer doing that business. My personal credit rating is not that good…probably in the- “fair-bad” rating because of medical bills and student loans. I’m wanting to start another eBay business and of course thatwould have me working at home…is it possible for me to get another tax id (EIN) number for that business and attempt to establish credit for that company? Is it possible if I have my home address as business address since I would actually primarily be working from home, but have separate business telephone line. I need to establish credit with my eBay business so I can make purcahsesfor inventory to sell, and mailing supplies. Can I get another tax ID number with new business? If I can then I will go to Staples to establish credit…will I need to make sure Staples report credit to ratings to bureaus…Also Does Dell extend credit with just TIN number vs my personal SS number because I really don’t want to reply on my personal credit score because it’s not that strong to be honest. Thanks!
Hello everyone, I wanted to start building credit for my business. I applied at Office Depot and got approved and I didn’t even have to use my SSN. I did try Dell but because my business had no credit history, they asked for a personal guarantee and my credit is not good. If anyone knows of any other places that you can apply using only my business info please let me know. Thanks, Lisa
I AM GLAD I FOUND THIS WED SITE I HAVE BEEN LOOKING FOR HELP FOR HRS AND NOT GETTING ANYWERE BUT BY JUST READING SOMTHINGS HERE I HAVE GOT MOST OF MY ANSWERS I HAVE ONE MORE AND I SEE A FEW PEOPLE ASKED IT. BUT NO ONE ANSWERED THEM YET WHAT ARE THE WED SITES OR COMPANYS THAT ME AND MY PARTNERS CAN GO TO AND GET UNSECURED CREDIT CARDS USING ONLY YOUR EIN ONE SITE SAYS “THERE ARE 40 COMPANYS THAT WILL GIVE YOU A CARD WITH OUT YOUR EIN” BUT THE WANT YOU TO PAY $300 FOR THE INFORMATION CAN SOMEONE HELP ME OUT.
Interesting subject and wide open space, yet why is that, nobody talks about the good old simple â€œline of creditâ€. If I would to do business, Iâ€˜ll go with â€œline of creditâ€, you cannot miss a payment, you donâ€™t have a time limitation of paying it off. Yes, you would start paying interest for every day of usage, but wouldnâ€™t that be tax deductible (you have to ask an accountant for this one)? And save?
On the other hand having the 1+month time to pay an amount with no interest is a bargain, if you have the guarantee that you would have the funds to pay it back on time. Yet that is in the future and unforeseen events may put you in rather inconvenient position.
Sooâ€¦ choice is yours and options are plenty. My suggestion is, have them both and use them accordingly. Good luck.
I would agree with John. Business is a separate entity; you don want and don’t have to use your personal SSN. That is why you create LLC, C- or S- Corp. To detach, separate yourself form your business. If your CC provider doesnâ€™t like it is his problem, not yours. There are plenty CC issuers. You are not out of luck.
I am trying to establish my ein number and i am confused when i fill out the application for a business credit card, on the irs form with my info it has my name then my business name underneith. When filling out the application do i put my name anywhere or just the business name?
Meghan: It depends on the application. Most have a place for your name and the business name. If your business has a name, enter that for the business name. If not (or if you don’t really have a business) then you can enter your name as the business name.
I have tried every method noted above – My business has been active since 2006. I have applied at Staples, Office Depot and Discover. Each requested that I send them a copy of my business license. In the state I live in (RI) a business license is not needed since I am a consultant. I have the utility bills for the location I work out of and my business bank info but they still say its not enough. What can I do?? Someone help
So I had my identity stolen and I work for a mortga ge company which is my parent company. I applied for a sole prop. EIN and I cant seem to establish credit with anyone. Everyone asks for my SSN which does me no good since I am in the process of trying to get a new SSN due to again identity theft. I don’t know what credit cards will accept me most haven’t and I can’t seem to get anywhere with this. Can anyone help?
with staples, you are most likekly to get approved by PRINTING OUT the application and FAXINg it to them along with a professionsal business letterhead and fax coversheet, along with a phone bill or whatever else you have that shows you are legit.
also, skip the PG part if you have one on any application- this will not work online but on faxes you will many times be APPROVED without it!
When u recieved your card at Bank of America, did they require your ssn?
I just formed an LLC for my Business, having it hard right now, applying for credit cards that need your ssn.
My credit score isnt all that bright, so i’d rather just use my EIN number.
I’m in the process of getting my business off the ground, I have some personal credit issues I’m afraid will hold me down. Where do I start to build credit & acquire a checking account with my EIN # only?
I am in the process of aquiring an EIN. I would like to establish credit in my home business name. Which cell phone companies, credit cards, stores are the best? My credit is fair, but not good enough to get the best rates. I would like to use my EIN only, not my SSN because I was notified of possible fraud on my credit reports and I am trying to get them cleaned up from that. I also found out there are three other people in my town with the same name. Would it be better to try to get a different SSN so I can distinguish it from the one that may have been used in the fraud?
Ive tried to apply for Staples an Office Depot cards for my business, unsuccessful. The problem is; there asking for a personal guarantor, because im jus now forming a LLC for my business, ive actually been in business for a yr 1/2, but I’ve formed the LLC for my business 2 months ago, unless you have previous credit history from your business they will need a personal guarantor. Everything that has been purchased for my business in the last year has been by me paying cash or using my own personal credit cards or checks, Im not on any credit lines or anything for my business. Should I just wait it out until I start to recieving credit card offers in the mail? Or keep trying?
((((((((PLEASE HELP ME!! ANYONE!!)))))))) Thanks!!
if you haven’t had any checking account problems in the past, like bouncing checks or having your account closed on you, you should be able to get a checking account by any bank that verifies with systemics (as opposed to with equifax).
in addition, this happens to bring up a great reason why you should work on your equifax file first when cleaning your personal credit report- it’s because many banks use specifically them when someone comes in to open a bank account.
(the two most checked places by banks, in my experience have been chexsystems and equifax.)
I am a sole proprietor selling from my own websites since 1998. I file schedules C & SE. I have had my EIN number since 1998 also. I have never applied for credit in my business name but have been called by the credit bureaus a few times over the years for info. Question: will I need to change to LLC, etc to get business credit?
I have a small boutique. I was able to obtain staples and dell credit with using my social security number. I am still trying / looking for a credit card that I will JUST use my EIN number. Does anyone know anywhere? PLEASE PLEASE
I just started a new LLC business and recently aquired my EIN number, how long does it take, after you receive the number that an actual credit report is set up to open checking accounts and business cards
staples & loews is a great place to start. You can also set up a d&b# on line to get your name out there. We will be reporting credit to the three major credit bureaus & d&b so we can improve or help get you established. Im interested in computer hardware companies who will give 30 day terms with just a EIN?
Who can also build our credit, Any suggestions?
I just got a Staples card using only my EIN – piece of cake! I don’t know what Staples requirements are, but I’ve had my EIN for about 4 years and got a visa card about a year ago that reports against the EIN, but requires personal guarantee.
As far as Staples is concerned– I just applied to them with my EIN, but they require a personal guarantor… which means they still want your personal credit information… I’m still looking for a creditor that will offer me credit without a personal guarantor. Has anyone found something yet without having to pay some agency loads of money? lol
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