It’s likely that you have heard about the significance of having an EIN (Employer Identification Number) if you currently run a business or are planning to do so. An EIN is a special nine-digit number given to your firm by the IRS to be used for tax purposes. It is comparable to a person’s Social Security number. The ability to open a business bank account is one of the advantages of having an EIN. But is an EIN number sufficient to create a bank account?
You can open a bank account using only your EIN number, in response to the question. In fact, before opening a business bank account, the majority of banks recommend that you obtain an EIN number. You’ll need to give the bank your EIN number, along with additional paperwork like your business formation documents and personal identity, in order to create a bank account.
The advantages of opening a bank account with your EIN are numerous. For tax and liability reasons, it helps keep your personal and corporate finances separate. Additionally, it enables you to take payments and conduct transactions under your company name, which gives the impression of professionalism to clients and suppliers.
The ability to buy wholesale is another benefit of having an EIN number, in addition to opening a bank account. Before making a wholesale purchase, many wholesalers demand that you obtain an EIN number. This is so because wholesalers frequently market to businesses rather than consumers. Being a real firm, as opposed to just a hobbyist or individual reseller, is demonstrated by having an EIN number.
Getting an EIN number is the first step if you’re considering launching your own business. On the IRS website, you can submit an online application for an EIN number. The procedure is easy and cost-free. You may open a bank account, make wholesale purchases, and begin establishing your business’s credit after you have your EIN number.
When it comes to business credit, many business owners are unsure if they may obtain a card with poor personal credit. Yes, it is possible, is the answer. Some credit card providers provide company credit cards that are not subject to a credit check or personal guarantee. These cards could, however, have smaller credit limits and higher interest rates. Before submitting an application for a business credit card, it’s crucial to conduct some research and weigh your possibilities.
Finally, there are numerous actions you can take if you wish to establish your business credit without using your personal credit. Make sure you have a separate company bank account and an EIN number first. Apply for a small company credit card next, and make responsible use of it. Keep your credit utilization low and pay your bills on schedule. Additionally, you can create trade lines with suppliers and merchants who file credit reports with business bureaus. These actions over time can assist you in building a solid corporate credit history independent of your personal credit.