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| *Ostroff, Fair and Company>>>Corporations |
Is there a way to build business credit before you have a corporation? |
i dont have a business yet or a corporatin, but i want to build business credit now while im young. or do i have to wait till i have a corporation to apply for credit by giving them the papers from the secratry of state? If you are planning to incorporate, it would be a waste of time to try building business credit for yourself, even if you are able to. A corporation is a separate legal entity, so when you incorporate, you would have to start from point zero again. I found a great E-Book on the subject of incorporation and building credit here: www.buildcorpcreditnow.com Hope this helps and good luck! Just because you have incorporated does not increase your credit. In fact, the fact that you have incorporated means that you now have limited liability (a creditor can only sue the corporation, but not you). Therefore, creditors will ask you for a personal guarantee before lending your corporation any money. Building credit for a incorporated business or personally is exactly the same, but personal credit is ALWAYS required. You can borrow based on your ability to repay, prove that you can and do repay, and then you can borrow more based on need and ability. In other words, it takes money making capacity to build credit. Credit is a form of leverage, meaning you are using somebody else鈥檚 money to make money. Generally speaking if you can make a profit ABOVE the cost of borrowing, then you are one smart business person and can build good credit. Good luck in your quest to build your credit. No need to incorporate -- just get a separate Federal Employer Identification Number (FEIN, or EIN for short). Use the online Form SS-4 at www.irs.gov. (The online form is quirky -- don't use hyphens, dashes or punctuation when you fill out the form or you'll get an error message when you submit it.) Submit the EIN application as a sole proprietor. To the best of my knowledge, the credit agencies look at the EIN, not whether it's incorporated or not. So get an EIN as a sole proprietor and build credit in the name of your business. |
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