The following information is from the Nav blog. Nav is a business credit building program. You can say they are like Experian Boost, but for business credit.
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We use and recommend Nav because they are an authority in the business credit space.
They let you know what financial products you have the best chance of being approved for.
Nav connects to your bank account and reports your financial activity to your business credit reports, such as Dun & Bradstreet.
All of this is to help build your business credit file and make you more attractive to lenders and creditors.
At The Business Depot, we strongly urge you NOT to operate your business as a sole Proprietor because of how vulnerable your personal assets are in a lawsuit.
Read more on our Better Business Blog
Your real estate, bank accounts and account receivables are at risk.
Visit our website for videos that go into full detail on this very important topic.
The following blog post from Nav touches on this, too.
For those of you who insist on starting and operating your business as a Sole Proprietor, and want to build business credit, this information is just for you.
Listen up. Here we go…
The easiest, fastest, and most common way to start and run a small business in the US is as a sole proprietorship. This type of business operates without forming an LLC, corporation, or another type of business entity.
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Many small businesses in the US operate this way, and while experts warn against the dangers, such as unlimited personal liability, this popular type of business can’t be ignored.
Business owners who operate sole props will often encounter the need for a small business loan or financing, and that’s where business credit can be very helpful. Good business credit scores can help open new financing opportunities.
Here we’ll explain how to build business credit as a sole proprietor.
Actively build business credit history and improve the metrics that matter to lenders.
Actively build business credit history and improve the metrics that matter to lenders.
Get a Nav tradeline that can improve your business credit score, leverage credit details to amplify your borrowing power, and access your best financing options — only at Nav.
Can You Build Business Credit as a Sole Proprietor?
The short answer is yes. It is possible to establish a business credit history even if you operate your business without forming a legal entity such as a limited liability company, LLC, or corporation. Regardless of the type of business you run, this usually doesn’t happen automatically or overnight.
Entrepreneurs often need to take specific steps to build a solid business credit rating. We’ll explain how to do that here.
First let’s talk about choosing your business name.
Choose your business name carefully; a good business name will be an asset. It should not be in use by a competitor, and ideally, you’ll want to secure the domain name and social media handles as well. A free business name generator can help you come up with ideas for your business name.
You’ll want to register your business name with your county or state. This is usually done with a fictitious business name filing also known as “doing business as” or “DBA”.
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Next step is to get an E I N From the IRS.
An employer identification number (EIN) is a type of tax id number used by small businesses. (Think of it like your business’ Social Security number.) It may not be required for your sole proprietorship, but getting one can be helpful as you establish your business identity and business credit.
Open a Business Bank Account Using Your EIN.
While a business bank account isn’t required to build business credit, getting a business checking account can be a helpful step for separating personal finances from business finances. It helps business owners track business expenses and revenues for tax purposes.
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It can also be helpful when applying for small business loans and financing, as many small business lenders require proof of business income.
Remember to compare the Best Business Checking Accounts
Compare the Best Business Checking Accounts
Opening a business checking account can increase your chances of getting financing and simplify your cash flow management. Use Nav’s research to find the right account quickly and easily for your business.
Disclaimer: We are NOT financial or legal experts.
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