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**BIZ CREDIT** Business Credit Building... The Mother Thread


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965 replies to this topic

#101 gromit

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Posted 28 August 2003 - 09:09 AM

Hey - Interesting. Ill have to some research on LLC's. For which do you use your S-Corp? Also - do your business's each have their own credit lines? Is all of your credit tied in with your ss#. I recently had a lead paint scare and I would like to completely isolate my properties from everything else as I imagine thats where my exposure is greatest. The problem is when Im trying to establish credit for my computer biz I always have to put in my SS# (all the regular stuff). When I pull my credit report everything is all mashed together under my personal profile. I suppose thats ok but I'd frankly like to separate the two. My computer biz is doing much better than the real estate and I think that hampers its growth in terms of getting extra capital for expansion since all my debt is tied to me instead of the biz and then also what if I get sued and some lawyer pulls my credit and finds everything -id like to have it more hidden.

Anyway I guess the fundamental question is how to establish buisiness credit without tying it into my personal credit that is already established. I was going to follow BHMH's suggestions at the start of this thread but I was not exactly clear on them - was the point how to establish credit or something else. The length of the thread has me confused so Im just looking for a recap on how to establish business credit without tying into my personal or making a PG.

thanks again



#102 hydranine

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Posted 28 August 2003 - 09:24 AM

Gromit:

LLC's have worked well for me in RE, but I use the S-Corp for my computer business. You are correct, being incorporated is good and will definitely help to protect you in the future.

None of my credit is tied to my businesses. Everything started out slowly with building a credit file with DNB and establishing a Paydex score. As well, we have many accts that have written us performance statement letters and we use that for future credit as well. Also a big help has been our tax returns obviously, due to showing excellent net returns and gross sales increasing yearly.

I never give out SSN, so once you build up a bit, you'll not have to. I started building credit long ago by using my printing company, my uncles RE Development firm, and several other small business companies that I used for property rehabs, building supplies, etc.

When you have a performance statement from Ingram Micro with a 225K LOC, then getting 50K from a new company is obviously simple. It is all about building with a strong foundation.

Start by adding any computer wholesalers that you use. I am not sure what facet of business you are in, but we may even be able to help you as we are international wholesalers.

Work your way up by adding Dell, Office Depot, Office Max, Sam's Club, BJ Wholesale, Costco, etc.

Move on to larger LOC and better terms.

I think we have several businesses here willing to trade off DNB TL info, so hopefully you can find some good resources on the board to get you started.

Basically, the bottom line is, it took me 4 years to get a 225K LOC with Ingram and a 160K line with Tech Data, it was not a quick process and it took alot of work.

NEVER miss a payment, and NEVER pay a net 30 late. The industry average is 6-7 days late beyond terms, and with us never being late once, that would explain why our paydex is much higher than the average.

#103 gromit

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Posted 28 August 2003 - 10:35 AM

Hydranine

This is fantastic - ive been reading these boards for a while now and everyones been great. All the advice on this board has really helped me over the last couple of years get more organized. My books used to be a mess, I never new how much I was making, how much I was spending, whether I was making a profit or not. Reading the posts have been inspiring in terms of just regularizing my business etc - getting things organized so now I feel like I'm at a point where I can really take advantage of what everyone is saying.

I guess next I just have to start doing the the leg work - building a credit file with DnB etc. Getting officially incorporated, following all the steps you and others have laid out.

Thanks

#104 BizCredit

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Posted 28 August 2003 - 10:38 AM

gromit: i have somthing for ya:

----------------------------------------------------------------------
Posted by Frank Chin on http://www.creonline...ages/85983.html

I'm not a CPA, but I have an LLC, C Corp, and S Corp.

As for me, the C Corp services as a management company for my RE activities, plus provide office services for the LLC. The C Corp bills the other entities for services performed.

At the beginning of the tax year, a projection is made of benefits (medical, co-pay etc.), compensation for the upcoming year, and the the appropriate intercompany billing scheme is devised. Purpose?? Revenues will roughly equal expenses by year end, thus no income. Ergo, no double taxation for the C Corp.

Thus, this sliver of income will enjoy the benfits of the C Corp. The balance of the P&L stays within the S Corp, and LLC etc, and taxed accordingly.

With Quickbooks, and its memorized transaction feature, the intercompany billings are handled quite automatically. I make a monthly deposit into the C Corp when I deposit the rent checks.

Yes, I have to do another set of tax returns at year end, which takes me about two or so hours with Turbo tax, with the data exported from Quickbooks. CPA's around here in NYC charge $700.00 minimum for each Corp entity, and Turbo Tax saves me a bundle. I also tried out "Tax Cut" put out by H&R Block.

To cover myself, I wrote an agreement between the entities as to what the billing is, and the work to be performed. For instance, for REI activities, the C Corp charges a fee equal to 10% of the rent roll.

If I have unexpected expenses, the C Corp will perform some additonal work, and invoice according to the agreement.
----------------------------------------------------------------------

that website (creonline.com) is a website I frequent for real estate investing ideas/ help.

#105 gromit

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Posted 28 August 2003 - 05:05 PM

Thanks BHMH:

I was wondering about the double taxation issue with a C corp. But im wondering on a C corp showing basically that it breaks even every year what are the chances of it getting credit for expansion. My main goad to be honest is to establish an entity (corp, llc or etc) that can get credit withough my PG. I was thinking of following the plan you first laid out at the start of this thread - is that the way to go? Was wondering if you could re-summerize it.

#106 BizCredit

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Posted 28 August 2003 - 05:07 PM

you should probably go for an S corp, if the problem is the taxation issue, but you dont want an LLC...

i am not a CPA, or Lawyer... Nor do I work for a CRA... ;-)

#107 pdiack

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Posted 28 August 2003 - 07:39 PM

BHMH - that Creonline post was great - I frequent that site about once a week - but didn't see that. I'm in the RE investing biz as well and I've setup an LLC for each property - but I like the idea of a central property mgmt company as a C corp - good stuff - thanks! :)

#108 BizCredit

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Posted 29 August 2003 - 03:02 AM

are the properties in trusts?

here is a relevant tip for all you CBers: always put your props in LLCs, even if the bank does not want!

having a collection or lawsuit (like a stupid $25 fine because a tenant put the milk carton in the wrong garbage) can show up on your credit report if you dont have the prop in another entity!

there are legal ways of putting the prop in trusts, so he banks cant call the loan due for change of ownership....

But I will use LLC anyway..... and risk the small chance of the loan being called... and if they call it, i will simply "rectify" my misdeed, by transferring title back to my name.

#109 BizCredit

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Posted 04 September 2003 - 01:39 AM

Anyone familiar with Registered agents to Georgia? and recommendations??

#110 megasun

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Posted 05 September 2003 - 08:02 AM

Great Topic! I too am a Real Estate Investor in Atlanta and I have sooo maxxed out my credit this year with properties. I need to transfer some of the cc debt for the dp onto Business CC or LOC, but like so many of us here we didn't know all the ins and outs of establishing Business Credit. Now I've been sucessful with Staples, but that is the only one without a PG. We all need to ban togeather now that we have the knowledge and truly set up our business affairs as well as we have our personal ones. We are set up with D&B, only have the Staples showing in our report, but I am willing to help any other Business as a trade off for helping our business. If we only need five reportable references, we should all be doing this. e-mail me if you are intrested.

#111 blueridge

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Posted 06 September 2003 - 10:31 AM

One problem with the proposal to report tradelines for each other is that D&B has a verification process for reported data. They check the industries of the vendor and vendee to see if the reported transaction makes sense. They also have other aspects of their verification. I get the feeling that a problem would arise. The phone number for the Emerging Data Sources department at D&B (which would be responsible for setting up reporting for small companies) is 610-882-6111. They can tell you more about the verification.

I would hate to see someone get banned from D&B's entire system. They can do that and there are few laws that regulate credit reporting for businesses.

#112 BizCredit

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Posted 14 September 2003 - 03:00 PM

OK, just ordered phone line for the corp I purchased on ebay...

Got around the Credit Check (NJ) by giving $200 deposit.. they pull EFX and TU, I don't need the inq's....

Now I listed under "contractors" in the yellow pages.

as soon as the listing is created (3 weeks, i think), i'll be on to try staples...

#113 BizCredit

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Posted 14 September 2003 - 03:00 PM

ON another note, a biz can obtain a LOC from Amazon.com.

It is issued by Citi USA, no PG or personal credit check.

havn't applied for it, though.

#114 KristofsMom

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Posted 14 September 2003 - 03:20 PM

I'm thinking of buying an apartment complex that is about to go into foreclosure. I really want to be prepared and have my ducks in a row...so to speak.

So, you guys are saying to have a C corp for the actual property management company and break off with individual LLC for EACH real estate purchased.

If i'm not right, please correct me. Also, please explain to me how/why this would effective. I completely understand about the lawsuit issue. Sometimes it take a few times to sink in.... it's the blonde in me for sure.

#115 moneyelf2

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Posted 14 September 2003 - 03:24 PM

Wow! Well there is proof. I learned about the Dun and Bradstreet business track from the "new credit file" info I ordered. Shady in some sections, for sure, and steering clear of outdated stuff and the illegalities, which are obvious. But mostly *quite* an informative download.

At this stage I definitley want to repair my own personal credit but the 'new file' info I have is still on the shelf. Planning to start my own biz-nass, too, once I get my personal credit file sea legs back on more securely ( for the sake of keeping my sanity, not becasue I don't believe). Will likely start a business file sometime next year is the plan. All kinds of ideas for businesses. Home based or small office baseed, of course. Thanks for the INSPIRATION! :P


.....the moneyelf

#116 bee bee

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Posted 16 September 2003 - 03:06 PM

LOC from Amazon.com. It is issued by Citi USA, no PG or personal credit check.


A LOC with no PG and personal CC. Is the maximum line small, something sounds very fishy; even moreso by the fact it's issued by Citibank. Anymore information on it that you'd care to share? Did you get this from the sight or spoke with someone who had info on it?

#117 BizCredit

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Posted 16 September 2003 - 03:14 PM

both.

the LOC is similar i would think to the limit they give for biz home depot cards... 2-3K.

there is info at the site ive seen as well.

#118 8004me

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Posted 20 September 2003 - 09:35 AM

I could not find the LOC on Amazons web site. Do you have to call ?

#119 ender510

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Posted 20 September 2003 - 11:50 AM

are the properties in trusts?

here is a relevant tip for all you CBers: always put your props in LLCs, even if the bank does not want!

having a collection or lawsuit (like a stupid $25 fine because a tenant put the milk carton in the wrong garbage) can show up on your credit report if you dont have the prop in another entity!

there are legal ways of putting the prop in trusts, so he banks cant call the loan due for change of ownership....

But I will use LLC anyway..... and risk the small chance of the loan being called... and if they call it, i will simply "rectify" my misdeed, by transferring title back to my name.


So are you suggesting that the property is bought in the personal name, then a quit claim to the LLC? Or are u saying use the LLC to buy the property? When using an LLC, a long history and good credit has to be estabished.. so how does one get started? Also if I do the personal name route, then when changing the insurance over, usually the lender will find out rather than the recording in the county.. so when that occurs, what do i tell the lender to avoid the due on sale?

#120 BizCredit

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Posted 25 September 2003 - 11:38 AM

yep. bought the prop in personal name, then transferred to LLC's

#121 felician0j

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Posted 25 September 2003 - 02:36 PM

I just faxed my app over to staples, and will wait for my reply for my biz acct. But hold on to your britches fellas! I called Dell, and was approved on the spot for $5000 and if I need more they will take it inot consideration. They didnt even ask me for my DnB number...that was too easy

#122 BizCredit

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Posted 25 September 2003 - 02:38 PM

good!

was in via Dell or via CIT?

for lease or for 30 days net?

do you have a phone in the biz name... if yes, did you fax staples that with the app?

#123 BizCredit

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Posted 25 September 2003 - 02:38 PM

I think the greatest thing about biz credit is (from what I can tell)
INQS DONT MATTER :D:):D:)

thats even better then no PG sometimes, LOL

#124 felician0j

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Posted 25 September 2003 - 02:41 PM

Net 60 days! from Dell I think

#125 BizCredit

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Posted 25 September 2003 - 02:44 PM

thats a good start.

ask them what they can offer ya from CIT for a lease...

see if its available to ya at all.....




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