Business Credit: Suggestions?

[lovebug5]

On another credit forum, there's an entire thread dedicated to obtaining business credit. Within this thread, they basically tell you that you cannot under any circumstance have a sole proprietorship. It is suggested that you incorporate your business and/or file to become an LLC. Although I see where everyone is going with that, incorporating doesn't necessarily work for everyone. Use me, as an example - I have absolutely no reason to incorporate at this point. Eventually down the line I might, but right now? Those filing fees, obtaining an umbrella business insurance policy...Just unnecessary expenses.

That being said, how does a sole proprietor go about obtaining business credit? Does anyone here have experience with this topic?

Frankly, I'm getting sick of using my personal card as a business card.

[willingtocope]

Advanta and Chase both have "Business" cards that they'll issue to sole props. The bad news is, while your company name is on the card, your personal gurantee is what they're after...which means if you default, its on your CRA and the FDCPA won't protect you.

Many of the supply stores...Office Max, Staples, Home Depot...will give you store credit. The credit lines will be small, but they'll work with.

[Moneedshelp]

If you have an EIN # you should be able to use that to obtain cards, but there will still probably be some personal liability attached. But u already have that with using your personal cards.

[lovebug5]

I'm not necessarily concerned about offering a PG at this point. I use my credit responsibly, I don't carry a balance, and I'm not concerned about any type of defaulting on any accounts. If I were to obtain a business CC or anything along those lines, any balance would be PIF'd the same month.

I've just read that most people are obtaining older, aged corporations for the purpose of building a credit profile - which is highly confusing to me to a certain degree...Because most of these people aren't running companies - they're just pretending to in order to obtain more credit in the long run...Whereas I'm actually a business owner - it's my sole income, and I'm not using it as a facade. *shrug*

Hmmmm. Thanks for the suggestions, guys. I appreciate it.

[dARTHcREDIT]

For the last 6 months I have been trying to establish business credit.

I formed an LLC, have an EIN # and even a Dunn & Bradstreet #. I have established (6) awesome trade lines, but still no actual business credit card.

The problem I'm having is that I don’t want another credit card/inquiry showing on my credit file. Most business cards like Citi, Chase and BoA report on your personal credit file and not your D&B file. Building business credit is far way more difficult than building personal credit, go figure. Anyhow so basically I use my Capital One business debit card for all my purchases. Any idea what credit cards are out there, that will use a D&B number?

Long live the entrepreneur!

[willingtocope]

The problem I'm having is that I don’t want another credit card/inquiry showing on my credit file. Most business cards like Citi, Chase and BoA report on your personal credit file and not your D&B file.

Honestly, its been 5 years or more since I applied for bus credit, but I don't think that's true. The application wants your personnal SS#...but...they probably don't check it UNTIL you default. They issue the credit based on D&B...but, they want history there.

You can also try AMEX...

[techentrepreneur]

Eventually down the line I might, but right now? Those filing fees, obtaining an umbrella business insurance policy...Just unnecessary expenses.

Frankly, I'm getting sick of using my personal card as a business card.

LLCs don't have very many filing fees are are pretty easy to setup. You basically need an article of organization (articles of incorporation if you are filing as a corporation). You have to file a yearly update document too and separate your business and personal finances all together.

Although the extra expenses may seem unnecessary consider the pros to having the corporation or LLC protection. What happens if someone sues your company for something related to your business? Without an LLC or Corporation setup they will be able to come after all of your personal assets! That is the number one disadvantage of a sole-proprietorship. This is especially dangerous if you are in a service industry like construction, but with the sue happy society we live in, no one is safe.

Of course if you don't file the documents or maintain separate finances some courts would veto your LLC or Corporation and they would be able to come after your personal assets anyway. LLC is the less formal and easier way to go though.