Starting a new Notary business can be costly. Therefore establishing business credit in the early stages of your business can be very beneficial. Business credit is a major financial tool that can be used to your benefit. Net 30 accounts and business credit cards can be used to cover your start-up costs as well as your day to day purchases. The difference between business credit and personal credit is that personal credit is attached to your Social Security Number, while business credit is attached to your Employer Identification Number. They’re both reported similarly, however, the business credit reporting agencies are Dun & Bradstreet (D&B), Experian and Equifax.
Business credit scores normally range from 1 to 100, the higher the score, the better your chances are of being approved. Just like with personal credit, paying your bills on time, having mix types of credit, not maxing out your credit limit etc., are all contributing factors to your credit score.
Now that you have an idea of what business credit is, let’s discuss how to establish it. Below are some things that you should have in order before starting your business credit journey. I personally recommend setting up your business properly from the whether you plan on establishing business credit or not.
Determine your Business Name
When establishing your business, you want to make the name is available and not being used by another company. Make sure to check different variations of spelling. You can start by conducting a business name search on your Secretary of State’s website. Keep in mind this search is only verifying that the business name is not in use in your state. Therefore, I also recommend doing a quick google search.
Choose a location
If you don’t have a brick and mortar (which most notaries don’t) then you’ll need to consider what address you’re going to use. Many advise against using your home address, although that’s what I’m currently using. Most credit experts recommend getting a virtual address. There’s several companies out there to choose from. You definitely don’t want to use a PO. Box!
Get a Business Phone
You’ll want to make sure you get a separate phone line for your business. I personally use Google voice at the moment. Sign up for a free account here.
Register Your Business Entity
Choose a business entity, either a Sole Proprietorship, LLC or Corporation. A LLC or corporation is highly recommended. Choosing a Sole Proprietorship may limit your credit building opportunities as some creditors or lenders don’t look at this entity as a real business. Also, as a Sole Proprietor, you are technically personally responsible and liable for the business which includes its finances.
Get an Employee Identification Number (EIN)
An Employer Identification Number (EIN) or Tax ID number must be obtained for tax purposes. This can be obtained from the IRS for free here.
Open a Business Bank Account
Now that you’ve officially established your business, you can open a business bank account. Almost all banks offer business accounts. I recommend looking into using a credit union. Navy Federal is also a great option if you’re in the military or have family ties to get in.
Apply for a DUNS Number
Establish your company with Dun & Bradstreet and obtain a D-U-N-S number. You can begin the process here.
Create an Online Presence
A website is a must and if you don’t already have a free Google my business page, then get one. When creating a google listing you also have an option to create a free one page website. You can also create a free website through Google Sites. It’s also a good idea to purchase a domain name and create an email address attached to your domain name. For example, my email address is info@prettyininknotary.com. You should also list yourself in several other online directories such as:
Establishing Tradelines
Once you have all these things in order, you’re ready to start building your business credit. You’ll start by applying with tier 1 vendors (see the list below), then you’ll eventually move your way up to tier 2, then to tier 3 vendors. Remember, one of the main goals when building business credit is to keep it separate from your personal credit, where you are personally liable. So when applying to vendors you want to always avoid using your SSN which implies a personal guarantee (PG). You want all your tradelines to be attached to your EIN not your SSN.
- U-line– Office furniture & supplies
- Gas cards
- Home Depot Pro/ Supply works
- The CEO Creative – Office supplies
- Summa Office Supplies
- Quill– Office supplies
- Shirts– Design your own Tees
- Grainger – Tools, janitorial supplies & safety equipment
- Nav Boost– Credit monitoring & reporting (use code 20forever)
PS: It’s recommended to spend at least $50 pretax on each vendor for reporting to occur
Your goal is to have an 80 Paydex score on Dun & Bradsheet and a 70+ on Experian before moving to tier 2. Your Equifax score will be the slowest to rise since many vendors don’t report to them. Keep in mind the approval process may be different for everyone and some will be denied. Also, remember not all tradelines or Net 30 accounts report and when they do report varies. Some report monthly, quarterly or bi-annually.
Freezing Your Personal Credit
Some recommend freezing your personal credit report to ensure that it’s not pulled when applying for business credit. Some companies may ask for your SSN for verification, but instead they do a soft pull. If you choose to freeze your credit, remember, you’ll have to freeze it with each credit bureau.
