C.  OBTAIN AN EMPLOYER IDENTIFICATION NUMBER (EIN)

The EIN is obtained from the IRS.  It's the tax identification number for a company.  Contrary to what others may promote, you cannot tell the age of the company by the EIN.  There are many promoters, using shelf corporations or shelf LLC's, to build corporate credit.  Many of them are NOT truthful.   They are claiming that by obtaining a shelf company with an existing EIN (aged EIN), that you're better off in terms of obtaining and building business credit (corporate credit).  This is false.  Since the EIN is assigned by the IRS, and it's a random number, then there's no method to determining the age of the company to build business credit.

In addition, a company without an EIN is more likely to be free of unseen liabilities, loans, obligations and other issues since it hasn't engaged in business.  A company with an EIN is more likely to have been involved in a business transaction that hasn't been completed, or back taxes are owed.  Who would sell a two or three year old company unless it went out of business?  A two or three year old company with NO EIN is much safer than a company with an EIN.  Without an EIN, a company cannot obtain a bank account or apply for credit.  This means obtaining a company without an EIN is safer than a company with an existing EIN.

There are times when the bank, where you're opening the bank account, would like to see the EIN application.  If so, provide them a copy.  Further, the EIN application should use a business address as the address of the company on that application.  Questions on how to apply for an EIN may be found here. 

D.  OBTAIN A BUSINESS BANK ACCOUNT

Keep in mind that the business bank account may change.  Lenders, when extending credit, ask you to open an account with their bank.  For example, Bank of America will ask you to open a new bank account with their bank, even if you already have an account with Wells Fargo bank.  Why?  Banks like to keep the money flowing in-house.  Although you may set up an account with one bank, expect a second account to be opened after you obtain financing.  This is normal.  This first account is used to start the business, get it going, buy supplies and build credit as necessary.

E.  HOME BASED BUSINESS?

A home based business is less likely to obtain business credit.  This is unfair, biased and unfortunate.  Although this is the case, adjust your plan to take this into consideration.  Banks are very conservative.  Anything that deviates from the "cookie-cutter" profile they seek, is considered suspect.  We're not saying it's right.  How do you deal with this if the business is home-based?  Seek out a business address to hang your address.  At the moment, there are many insurance agents and real estate agents who seek to reduce their office expenses.  If they have a business address, you may be able to pay them a monthly fee to receive mail at that address.  In essence, you're sharing a desk in their office.  If your presence is minimal, and you're there to only pick up the mail, then paying $60-100 per month may be worth it for them.

NOTE:  411 SERVICES AND YOUR ADDRESS:

A business address should be used with yellow pages, and yellow book.  Registration with 411 should match the same information as the directories, internet searches, Secretary of State and other sources of information.

NOTE:  VIRTUAL OFFICE ADDRESSES V. REGULAR OFFICE ADDRESS

A virtual office is a low cost alternative that allows you access to phone, fax, mail, other office services.  Although these services are an excellent idea, they are not advisable as an address for your business.  You may use a virtual office for faxes, meeting clients, and other activity.  The problem lies with the address.  That address, as a virtual office center, has the liability of having too many companies using the same address.  Since other companies used that address and also applied for financing, then the address may become "flagged."  In other words, if too many companies applied for financing and didn't pay the loans, then the address may be flagged as a virtual office, shared office with too many companies, or an address where fraud has occurred. 

F.  UNDERSTAND THE LIMITATIONS OF MANY BANK EMPLOYEES

Many bank employees don't have any real business experience--other than through a bank.  Often times, a bank representative will obtain their primary training at that very bank through in-house training programs.  Unfortunately, many of them don't go to business school.  And many bank representatives, that lend money to businesses, cannot tell you what is a corporation, how it is formed, and what are resolutions.  It's okay if you don't know these factoids for now, but you would expect a representative of a reputable business lender to know these fundamental issues.  As a result, understand their limitations and work with them.  They are rule oriented.  And they need all issues to look normal, cookie-cutter, usual, boring and without surprises.  A long story doesn't fit into their model.  So, make sure that questions are answered clearly, concisely, and truthfully, while meeting their requirements.  If they don't follow their internal rules, as nonsensical as they seem, just work with them to complete what's necessary.  Remember, you're there to obtain financing while providing truthful information.  You're not there to re-organize the banking system or conduct a training session on your industry.

G.  STAY AWAY FROM CONTROVERSIAL BUSINESS NAMES.

Since banks have lost much money on real estate, due to speculators, then don't incorporate with a names such as Real Estate, Holdings, Investments, or Investors.  Instead, use words such as Enterprises, Associates, Services, Group, Management, Technology, Methods and other like words in the business name.  Again, we're referring to the bias of individual persons at the bank.  Biases are important in lending and they exist.  Your goal is to be aware of these biases and to get by them the best way you may.  They key is to incorporate a name, or to obtain a shelf company, that is suitable to build corporate credit and has a name that is not on the banks' bias list. 

What about a name change?  For some reason, the banks consider name changes as a new company.  This means that a two year old company may be considered a new company upon changing the name.  To avoid this, consider a Doing-Business-As (DBA) or trade name on a state or local level.  This should be done before you take steps to build the business credit profile and build corporate credit.

H.  DOMAIN NAME REGISTRATION AND CORRECT USE OF EMAIL.

If you have a domain, use it for email.  If you intend to obtain financing, then stay away from email addresses such as gmail.com, hotmail.com and the like.  Use your domain name for your email.  Make sure that the registration information for your domain name matches the information reported to the Secretary of State and the banks.

I.  THE BASIC BUSINESS CREDIT BUILDING CHECKLIST:  ARE YOU READY?

• Your company is filed.  Better yet, you obtained a clean and aged shelf corporation or shelf LLC.
• EIN obtained with the IRS, using a business address
• Checking account for the business
• Your name, and your business address is on the public record with the Secretary of State where the company was formed and where you intend to do business.
• Internet Domain registered.  You set up your email account and it works.  Your domain registration address matches your business address.
• Your business address is clean and it not a virtual office.
• You registered the business with 411 services and other directory listings.

BELOW ARE BASIC RULES TO DEVELOP YOUR CORPORATE CREDIT PROFILE, AND TO AVOID MISTAKES: