An Employer Identification Number (EIN) is one of the first things you’ll need if you’re trying to build business credit. The Internal Revenue Service (IRS) issues an EIN, a special nine-digit number, to identify your firm for tax purposes. To obtain an EIN for your company credit, follow these steps:
Ascertain whether you require an EIN: You must have an EIN if your company employs people. You also need an EIN if your company is set up as a corporation, partnership, or LLC. Obtaining an EIN will help you keep your personal and business finances separate, even if you operate as a sole proprietor.
2. Obtain an EIN: You can obtain an EIN via phone, fax, mail, or online. The IRS website is the best and quickest place to submit an application. You can apply for an EIN without paying anything, and you’ll get one right away.
3. Establishing company credit using your EIN: Once you have it, you can apply for business credit using your EIN. Obtaining a DUNS number from corporate credit reporting company Dun & Bradstreet should be one of your initial steps. A DUNS number is a distinctive nine-digit identification that aids creditors and vendors in determining the creditworthiness of your company. What Kinds of Applications Can You Make Using Your DUNS Number?
You can apply for company credit cards, loans, and lines of credit using a DUNS number. Additionally, you can use your DUNS number to build up your company credit by interacting with suppliers and vendors who submit payment information to credit bureaus. Do Business Credit Cards File Reports with the IRS?
Business credit cards do indeed file reports with the IRS. You must maintain thorough records of your transactions and report them on your tax returns if you use a company credit card for business costs. To assist lower your taxable income, you might be eligible to deduct some of your business expenses. Can You Use a Business Credit Card to Buy a Car?
A business credit card probably won’t let you purchase a car because most credit card companies impose limits on how much you may charge. Additionally, credit card payments for expensive items like cars are often not accepted at car dealerships. However, for modest costs like gas, upkeep, and repairs for your vehicles, you might be able to utilize a company credit card. Can a sole proprietor use a personal card for business purposes?
Yes, a lone entrepreneur may charge business expenses to a personal credit card. To prevent confusion and potential legal problems, it’s crucial to maintain precise records of your transactions and to keep your personal and company costs separate. Getting a second business credit card is a smart option as well because it will help you handle your finances and develop your company’s credit.
As the IRS uses the SSN of the responsible person to identify the business entity associated with the EIN, your EIN (Employer Identification Number) is linked to your SSN. However, utilizing an EIN rather than an SSN can help safeguard your privacy and personal data.