Getting a federal employer identification number (EIN) is essential for any business, including a limited liability company (LLC). An EIN is like a social security number for a business and is required to open a business bank account in the name of the corporation or LLC. It is also necessary for filing federal tax returns. Additionally, many larger companies require an EIN from their suppliers in order to pay them for services provided.
It is important to keep personal and business finances separate. When a business owner pays for business expenses through a personal line of credit, such as a credit card, they run the risk of being held responsible for debts incurred. Over time, creditors, lenders, and suppliers will report repayment activity and credit limits to business credit reporting agencies. Having a business credit history separate from staff can minimize the negative effect one may have on the other.
If you have strong personal credit, you may qualify for business loans or lines of credit with favorable rates and terms. Business credit reports can be crucial for obtaining loans and credits, as well as for negotiating investments and agreements with suppliers. It is important to check your credit ratings with the three major credit bureaus and continue to monitor them. Building business credit takes time, so it should be part of the start-up process for an LLC.
If your personal credit rating isn't very good, you should try to include negative information in reports and start a credit repair process. This will help you get better rates on goods and services. Organizations need to ensure compliance with ever-changing regulatory obligations, manage risk, increase efficiency, and produce better business results. Having a clear separation between personal and business finances can help you achieve these goals.