Sole-Proprietorship, Corporation or LLC – What’s Best for Getting Business Credit?

Starting or just started a business?…  Surprisingly, how you form your company affects getting business credit – and how much it gets.

That’s why it pays to incorporate your company the right way starting out – or change your company structure now, so you can get more business financing.

How to Divorce Your Business’s Credit from Your Personal Credit

The only true way to build business credit is to establish a separate business credit identity.   Just as you have your own credit reports and credit scores, your business needs its own credit reports and credit scores.

Without this separation, you’ll need excellent personal credit to get business financing.  And, because banks lend up to ten times less money to individuals than to small businesses, you’ll stunt your company’s credit-getting potential.

What’s the Secret to Getting Business Credit Without Using Your Social Security Number?

Simple.  Get an Employer Identification Number (called an EIN or Tax ID) from the IRS.  The good news is, you can get one instantly, for free, from the IRS website.

EINs are required for corporations and LLCs, but you can also get them for sole-proprietorships and partnerships.

EINs are like social security numbers for companies.

Getting an EIN won’t instantly establish your company’s credit identity.  That’s a myth.  It happens only after you open lines of credit (using your EIN) with vendors and lenders.   Once they report your payment histories to the business credit bureaus, your company’s credit files are automatically “activated.”   This takes anywhere from one to three months.

Which Entity is Best – Sole-Proprietor, Corporation or LLC?

Even though you can get an EIN for any business entity, the only type you should form (for credit-building purposes), is an LLC or corporation.

Banks and vendors perceive LLC’s and corporations as being more credible – and in turn, more creditworthy.   After all, it takes a little more time and effort to setup a corporation or LLC.  All sole-proprietors have to do is say they’re in business to be in business – they could be fly-by-night outfits as far as lenders know!

In the past, some experts advised setting up corporations versus LLC’s.  However, in my experience helping business owners get credit, there isn’t a distinguishable difference in getting credit between the two.  What matters most is having a credit-building strategy – and sticking to it!

LLC’s are easier to form and manage than corporations, because there are less corporate formalities.

Most states let you form corporations or LLCS online in minutes (without an attorney) for $50 to $600.

In my Six Figure Business Credit course, I show you exactly how to setup a corporation or LLC in your state, yourself…  and…  Establish credit files and credit scores with the three major business credit bureaus – Dun and Bradstreet, Experian and Equifax.

Once You Have a Corporation or LLC – Then What?…

Building business credit is hard when you do it alone.  It’s like throwing a dart with your eyes closed and expecting to hit the bulls-eye…   You’re more likely to miss the target (and miss the dartboard, too!)

It’s infinitely easier when you follow a tested plan.  After all, pioneers come home with arrows!

In addition to choosing the right business entity, there’s nine other steps credit-building steps that multiply your credit approvals and credit limits – that have nothing to do with having good business credit!  They’re included in my new Six Figure Business Credit course.

They’re simple enough even a 10-year-old could do them…  but…  Just as choosing the wrong business entity can get you turned-down for business credit and loans, not knowing (and following) these nine other steps make is much harder to get business financing.

Don’t leave getting business credit up to chance. Click here now to discover how you can get my complete Six Figure Business Credit course on a 100% risk-free basis today…