When your business is still fresh and new, it doesn’t have the same borrowing power and credit as more established companies. While incorporating or forming an LLC is beneficial, there’s one element that has to be done, regardless of the kind of business you’re creating. Fortunately, that doesn’t prohibit you from building your credit up so that you can do more to ensure success. One of the most critical steps in this process is obtaining an EIN number. Today, we’re going to show you how to build credit with this number. You can use an EIN filing service to expedite things and get your EIN even faster.
What is an EIN?
This is an employer ID number, which is necessary if you are creating a separate entity from yourself. Corporations and LLCs require you to get an EIN because you can’t use your social security number (SSN) to file company taxes.
However, an EIN can open the door for building credit, so it’s a great place to start.
Who Needs an EIN?
Some business entities don’t require this kind of tax ID because you can use your SSN to file business taxes. However, even if you don’t have to get an EIN, it’s always better to apply for it no matter what. If you are a sole proprietor, it may only be required under certain circumstances. The IRS also has an EIN questionnaire which can help you in determining whether you need to obtain one.
Open a Business Bank Account
If you want to open accounts for your business, then you have to have an EIN. This is also how you can get lines of credit for your company. Once you have your number, you should open both a checking and a savings account.
While an EIN is essential, getting an ID number from Dun & Bradstreet. This is a company that monitors and surveys business credit information, so having a number from them can help you get farther than if you just had an EIN.
Use Your EIN for Accounts
You have a lot of bills to pay as a business, so you should use your EIN for all of them. Phone, internet, utilities – they all should be attached to your EIN. As you make payments on time, it will build credit for your company.
How to Apply for an EIN
There are four easy ways to apply for an EIN. You can apply through Online, Telephone, Mail and Fax. Applying for an EIN has never been this easy, in fact, there are a lot of sites that you may find when searching the internet about applying EIN online, just make sure that you are accessing a legit site and not scam sites.
Building credit takes time, so don’t assume that you can increase your borrowing power overnight. The key is to pay your bills on time, and if you do secure a loan, never pay it late. The more you can do this, the better your credit will be and the more you can do to grow and succeed.