8 Steps to Business Credit for Online Startups [With 5 Card Application Links]

8 Steps to Business Credit for Online Startups
This page was originally published May 9, 2022 and updated July 4, 2024.

Being the founder of a startup can be exhilarating; your vision, energy, and drive fuel the engine of innovation. However, a crucial component that spices up the startup recipe is often overlooked—business credit. Establishing strong business credit can pave the way for financial opportunities crucial to long-term success. If you are a startup entrepreneur navigating the tumultuous waters of establishing credit for your venture, this comprehensive guide is crafted just for you.

Think of business credit like a key that can unlock many doors for your startup. When you keep your personal and business money separate and work on building your company’s credit, you’re setting up a strong foundation. This means you could get better loans, more credit, and opportunities with vendors, attract investors, and even grow your business overseas. It’s like putting on a safety net to protect your personal assets while giving your business its own path to success. Starting now to build business credit is like planting a tree; the sooner, the better for a lush growth in the future.

8 Steps to Establishing Business Credit

Creating business credit is not an overnight thing. It takes a little planning but in a few short steps you’ll be able to apply for the credit your business needs to thrive. These steps are not just recommended for business credit purposes. They are your shortcuts to a professional online business that covers all of the financial and legal bases you need.

From the beginning, it is important to separate your business life from your person life. Even if you’ve already launched your startup, it’s never too late to get things right. The steps below not only will help you get credit in your business name, they will also help you establish your professional presence to take advantage of all protections and benefits that come with it. Here are the 8 steps you need to take to get your business off on the right foot and get startup funding you need to grow:

1. Establish Your LLC

The first step in creating business credit is setting up a legal business entity. A Limited Liability Company (LLC) is a popular structure for startups due to its simplicity and protection it offers its members’ personal assets from business liabilities.

Benefits of setting up an LLC include:

  • Personal Asset Protection: An LLC creates a legal separation between the business owner’s personal finances and the business debts, protecting personal assets in case of business liabilities or lawsuits.
  • Pass-Through Taxation: Profits and losses of the business can pass through to the owner’s personal tax return, potentially simplifying tax filing and possibly reducing taxes owed.
  • Credibility and Professionalism: Forming an LLC can enhance your business’s credibility with potential customers, vendors, and partners.
  • Flexible Management Structure: Unlike corporations, LLCs are not required to have a board of directors or annual meetings, offering greater flexibility in management and operations.
  • Ease of Raising Capital: An LLC may find it easier to attract investors compared to sole proprietorships or partnerships, due to the limited liability and structured business framework.

An LLC offers a blend of personal asset protection, tax advantages, operational flexibility, and enhanced credibility. These features not only safeguard the business owner’s financial health but also lay a strong foundation for future growth and investment opportunities, making it a preferred choice for startups aiming for long-term success.

If you’d like someone to handle all of the paperwork, we recommend Bizee as your go-to service. Bizee offers a streamlined, user-friendly process that simplifies the complex steps of forming an LLC. With their expert guidance, you’re not just filing necessary paperwork; you’re also gaining a partner dedicated to ensuring your business starts on the right legal and financial footing. Their services include personalized support, compliance checks, and everything you need to bring your business to life quickly and effectively. When you choose Bizee, you’re choosing a path that leads to less hassle and more focus on what truly matters – growing your business.

2. Obtain an Employer Identification Number (EIN)

An EIN is your business’s Social Security number. It’s essential for tax purposes and is crucial for establishing business credit. You can apply for an EIN through the IRS website.

Applying for an EIN is not only a step towards compliance but also a necessary action for distinguishing your business as a separate financial entity. Beyond its critical role in tax identification, an EIN enables businesses to open bank accounts, apply for business licenses, and hire employees under the company banner.

This nine-digit number effectively becomes the identifier for your business in its interactions with the federal government and often with state governments as well. Perhaps most importantly, having an EIN is a prerequisite for building a credit profile for your business, separate from your personal credit, which is vital for businesses looking to obtain loans, lines of credit, or other forms of financial investment. The process of obtaining an EIN is straightforward and free of charge, making it an accessible step for all businesses at the outset of their establishment.

If you choose Bizee to form your LLC, they will get your Employer Identification Number (EIN) on your behalf. Otherwise you can apply online for your EIN on the IRS website here.

3. Get a Virtual Office

Even if you are operating out of your garage, a virtual office address lends credibility and is usually a prerequisite for business credit applications.

  • Improves Professional Image: A virtual office provides a prestigious business address, enhancing your company’s professional image and credibility.
  • Cost-Effective: Eliminates the need for a traditional physical office space, saving on rent, utilities, and office maintenance costs.
  • Flexible: Offers the flexibility to work from anywhere, promoting a better work-life balance for you and your employees.
  • Support Services: Access to business support services such as mail handling, receptionist services, and meeting room rentals.
  • Enhances Privacy: Keeps your personal address private, separating personal and business correspondence for enhanced privacy and security.

A virtual office offers scalability to adapt to changing business needs. With additional support services available, a virtual office can streamline operations, improve efficiency, and protect personal privacy, making it an excellent strategy for businesses aiming to establish credibility and grow their operations efficiently.

We recommend Davinci Virtual Offices as a top choice for virtual office solutions nationwide. From mail handling and live receptionist services to access to well-equipped meeting spaces, Davinci Virtual Offices provides everything needed to establish a credible, professional presence while keeping overhead costs low. This makes Davinci an ideal partner for any business who wants to maintain flexibility, enhance their professional image, and achieve sustainable growth.

4. Set Up Your Business Phone

A dedicated business phone number demonstrates stability to lenders and contributes to your business’s legitimacy. Once you have your business phone number, register it on listyourself.net. so that it’s listed in local and national 411 directories. It’s free.

  • Professional Appearance: Having a dedicated business phone number projects a professional image, separating personal life from business.
  • Increased Credibility: A specific business line enhances credibility with customers, clients, and partners who prefer dealing with a professional entity.
  • Better Organization: Separate business calls from personal calls, allowing for better management and organization of business communications.
  • Enhanced Privacy: Protects personal privacy by not requiring the business owner to share their personal phone number with clients.
  • Improved Customer Service: Allows for the implementation of business-specific features such as voicemail, on-hold messages, and call routing, offering a better experience to callers.
  • Marketing Tool: A business phone number can be used in all marketing materials, providing a consistent point of contact for the business.

A dedicated business phone number is a strategic move that enhances your professional appearance and let’s you be more efficient. It’s simple, really. When your business is easily accessible and provides a seamless communication experience, you set a foundation for increased trust and stronger relationships with your customers, clients, and partners.

We highly recommend Phone.com. It’s a versatile and affordable solution. With Phone.com, you get access to a wide range of features such as customizable voicemail, call forwarding, and the ability to add multiple lines which can significantly enhance the way your business communicates. Plus, the convenience of setting everything up online means you can have your business phone system operational in no time, ensuring you’re always connected to your clients and partners.

6. Open a Business Bank Account

Separating personal and business finances is non-negotiable. Most business credit lines demand a business checking account for transactions, and it’s a customary step in showing financial autonomy to your creditors.

  • Financial Clarity: A business bank account offers crystal-clear separation of personal and business transactions, simplifying accounting and tax filing.
  • Professionalism: Accepting payments in the name of your business boosts your credibility with customers and partners.
  • Creditworthiness: It establishes your business’s financial identity, which is crucial for applying for business loans or credit lines.
  • Access to Business Services: Many banks offer business clients special services, including merchant services, business credit cards, and lines of credit.

Opening your business bank account is more than just a regulatory formality; it is a foundational step towards establishing your business’s financial health and credibility. It lends to professionalism and lays the groundwork for effective financial management. It lets you streamline your accounting processes, improve your financial analysis, and build a solid history for creditworthiness. Bottom line: a business bank account is a key pillar in the financial infrastructure of any serious enterprise, paving the way for growth and facilitating smoother operational workflows.

Relay Financial Business Checking Account is the perfect choice for online businesses. Relay Financial is good about supporting your business’s growth at every stage, offering easy integration with accounting software like FreshBooks, has no minimum balance requirements, and dedicated customer support. With its emphasis on simplicity, transparency, and control, Relay Financial Business Checking Account stands out as a prime choice for entrepreneurs looking to establish a solid financial foundation for their enterprise.

7. Obtain a D-U-N-S Number

A D-U-N-S Number, which stands for Data Universal Numbering System, is a unique nine-digit identifier for businesses. It is issued by Dun & Bradstreet (D&B) and is used to establish a business credit file, which could be considered similar to a personal credit score for a business. This number is a universal standard for identifying and keeping track of over 330 million businesses worldwide.

This unique identifier provided by Dun and Bradstreet is the golden ticket to building your business credit report. It is free to get.

Obtaining a D-U-N-S Number for your business is straightforward. Here’s how you can acquire one:

  • Visit the Dun & Bradstreet (D&B) website application form here.
  • If your business is not already listed, you’ll see an option to request a new D-U-N-S Number. Click on this to proceed.
  • You will be required to provide some basic information about your business, including legal name, headquarters address, and the number of employees. It’s crucial to fill out this information accurately to ensure your business identity is correctly established.
  • After submitting your information, there might be a waiting period. The time it takes to receive your D-U-N-S Number can vary, but it’s typically a few business days. This number is provided free of charge by D&B and is essential for establishing your business credit profile.

Ensure to keep your business information up to date with Dun & Bradstreet to maintain the accuracy of your credit report, which can significantly impact your ability to secure financing and credit lines for your business.

8. Apply for Business Credit

Now that you’ve laid down the groundwork, it’s time to apply for business credit. Here are some credit card options that are particularly startup-friendly. Applying for business credit is your next milestone. Below, we’ll introduce some credit card options tailor-made for startups like yours. These companies understand the unique challenges and opportunities that startups face, offering financial products designed to support your business’s scaling efforts.

Blue Business Plus Credit Card

Business owners rave about the Blue Business Plus card from American Express for its no annual fee and a solid rewards structure that can be lucrative for a company starting out.

The American Express Blue Business Plus Card stands out for its exceptional reward program, which allocates 2X points for the first $50,000 spent each year, with 1 point per dollar thereafter. This feature is particularly beneficial for startups looking to maximize rewards on their business expenses without worrying about category restrictions. Additionally, the card offers a 0% introductory APR on purchases for the first 12 months, a boon for businesses planning major purchases or those who want to manage cash flow effectively in their early stages. The convenience of no annual fee further enhances its appeal, making it an economically savvy choice for prudent business owners aiming to optimize their spending while accruing valuable rewards.

Capital 1 Credit Card

Another no-fee card from Capital 1, is geared towards small businesses and startups. Their application process is streamlined, making it ideal for businesses new to the credit game.

The Capital 1 Business Credit Card prides itself on being more than just a credit card; it’s a tool designed to support the financial health of a startup. With every transaction, businesses earn valuable rewards points that can be redeemed for travel, merchandise, or even applied as a statement credit. In the first year alone, users can accumulate up to $100,000 in credit, subject to approval, which demonstrates its commitment to providing substantial financial support. Furthermore, the card’s flexibility is evident in its cashback options and competitive APR, tailored to aid startups in managing their expenses more effectively. This accessibility and ease of use make the Capital 1 Business Credit Card a standout choice for entrepreneurs seeking a reliable financial partner to fuel their growth ambitions.

BILL Spend & Expense Credit Line (Formerly Divvy)

With no annual fee, BILL Spend & Expense’s credit line is not particularly a card, but a virtual card program that enables businesses to streamline expense management. Its rewards and convenience make it a notable option.

BILL Spend & Expense offers the convenience of a virtual card, and also provides businesses with powerful tools for real-time expense monitoring and budget management. This ensures that companies can keep a close eye on their financial activities, promoting fiscal responsibility while reducing the risk of overspending.

BILL Spend & Expense’s rewards users with points for every dollar spent, which can be redeemed for travel, cash back, or used towards other business expenses, adding valuable incentives for companies to manage their finances smartly.

Nav Business Credit

Nav Business Credit offers a unique platform where you can access business credit scores and explore financing options tailored to your business needs. With Nav, you’re not just applying for a credit product; you’re empowered to understand and improve your credit, which can open up better financing opportunities.

Nav provides access to flexible credit terms best suited to your needs as well as personalized credit-building tips, helping you to strategically enhance your credit profile. This proactive approach to managing your business finances means that you’re always one step ahead, ensuring that you’re in the best possible position to secure the funds you need when you need them.

Torpago Credit

Torpago’s credit line offers flexible terms and a user-friendly platform that startups find inviting. Their customer service is also highly recommended.

The Torpago Business Credit Card is designed with the unique needs of startups and growing businesses in mind, emphasizing ease of use and financial flexibility. Unlike traditional credit cards, Torpago provides an expansive credit limit that adapts to the evolving needs of a dynamic business environment, thereby supporting businesses in their growth phases without the typical financial straitjacket.

Rewards can be redeemed in various ways, including travel, cash back, or even reinvestment into the business, offering tangible value beyond mere credit. With Torpago, businesses gain more than just a credit line; they acquire a financial partner that contributes to their operational efficiency and growth.

When it comes to getting a business credit card, it’s all about being ready and smart. Think of it like preparing for a big project. Make sure you have a strong plan for your business and know exactly how you’ll use the credit to help your company grow. Check that you’ve got all your paperwork and required stuff in order. It’s like packing your backpack with everything you need before heading out on an adventure. With everything in place, you’re set to apply and get the financial buddy your business needs to keep moving forward.

Fund Your Dream

Establishing and improving your business credit isn’t just a box to check off; it’s a crucial step in nurturing your business’s growth potential. Consider these business credit cards to help fund your dream. By focusing on building a solid credit profile, you’re making sure it has what it needs to expand and reach towards the sky. Your brand new startup is not just about the great idea or the hard work anymore; it’s also about how you manage your money and build your business’s credit profile. Think of your business credit as a report card for your company, telling banks and investors how trustworthy you are with money. Getting this right can open doors to more funding and better terms that can help your startup grow. Keep this guide as your compass and forge ahead with the confidence that you are laying the financial groundwork that will support your business for years to come.

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