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etting a business credit card using the EIN only enables you to keep your company and personal finances separate by establishing credit for your company.
In this article we’ll outline the pros of using an Employer Identification Number (EIN) when you want to apply for business credit cards and highlight for you some of the few notable options below which only require an EIN for the application process. Also, we give tips on how to build and use business credit using your EIN.
Let’s dive in!
What Is an EIN?
If you are an entrepreneur, the sooner you apply for the Employer Identification Number (EIN), the better, since it is a mandatory necessity for your business. This identification number is composed of nine digits and is issued by the Internal Revenue Service (IRS). Just as a Social Security Number serves to identify individuals and their differences, EINs will set your business apart from the others.
If your business is located in the US or its territories, there are a few ways to apply for an EIN. In fact, the whole process of applying for an EIN online can be done with just a click of your mouse. When applying online, you must choose either your Social Security number or another type of tax identification number that can be used.
However, for your business to function effectively abroad, you must contact the IRS directly by phone or by fax and mail.
Benefits of Using an EIN When Applying for Business Credit Cards
For a business that is interested in getting a credit card, an EIN can be beneficial in many ways.
Establishing a business credit history
A separate credit history for the business is one of the biggest benefits of having an EIN.
Whenever applying for a corporate credit card, the card issuers report the account activity to commercial credit bureaus, which retain an all-inclusive financial profile of your business that may prove invaluable as your company expands and needs additional funding for growth or working capital requirements.
Starting with a healthy credit history can be a good way of increasing your chances of getting better terms and rates in case you need financial assistance later.
Separating business and personal finances
Another compelling advantage of using an EIN when applying for business credit cards is the clear separation of business and personal finances. A business credit card can allow you to simplify cost tracking, maintain good recordkeeping for accounting purposes, and report income tax.
By separating business and personal finances in this way, not only does it help to simplify your financial management but it also gives you an accurate and more detailed representation of your company’s performance resulting in better decision making.
Mitigating personal risk
While it is possible to generate a business credit history using your Social Security number when applying for a business credit card, having an EIN provides extra protection by separating personal finances from business operations. This separation effectively reduces potential risks and safeguards your personal assets.
What Business Credit Cards Can You Get with Only an EIN?
Credit card options exist, albeit limited, allowing you to apply using your EIN instead of a Social Security Number (SSN). Certain issuers permit this approach for business credit cards. Let's explore!
Corporate business EIN credit cards
Among the primary benefits of corporate business EIN credit cards is that they add an extra line of defense for personal credit. With only the use of your EIN, your personal credit gets disconnected from the activities of your business. Such a separation can be very useful for preserving your individual creditworthiness, particularly if your business is at some point going through financial issues.
Corporate store credit cards
For companies that routinely buy from particular shops or suppliers, corporate store credit cards may be a strategic pick. You can use your EIN when applying for exclusive industry-specific rewards, discounts, and promotions. Tailoring incentives lets businesses cut costs and boost efficiency. This targeted approach helps operations run smoother.
Corporate gas cards
If your business operates a number of vehicles or relies heavily on transportation, corporate gas cards can be a lifesaver as applying with your EIN allows you to streamline fuel expenses, track mileage, and monitor vehicle usage with greater precision.
Additionally, many corporate gas card providers offer fuel discounts, roadside assistance, and other valuable perks. This adds up to effective fleet management and consequently improves the operations of the business.
Business credit cards with no personal guarantee
For businesses willing to decrease their personal liability, business credit cards with no personal guarantee are real game-changers. You eliminate the need to personally guarantee the credit line by applying solely with your EIN, thus effectively separating your business and personal finances.
This approach is effective as knowing that your personal assets are safeguarded in the event of any business-related financial challenges provides you peace of mind.
Business Credit Cards With EIN Only
Since corporate credit cards are typically the only type of cards applicants can secure by solely providing their EIN, the options are indeed slim. However, for businesses that meet certain criteria, there are a few notable choices worth exploring. Here are some options you can apply for without having to include your SSN alongside your EIN, with dedicated paragraphs explaining the benefits of each:
Brex card
You can apply for this corporate credit card without using your SSN if you present to them your U.S. EIN provided by the IRS, valid U.S. incorporation as well as the physical address of the business entity.
As a small business owner, it is not only the ease of application that you derive from employing this method but also the freedom to separate your personal financial records from those of your firm.
Ramp business card
The Ramp Business Card is a great deal for those companies that can meet the requirement of having at least $75,000 in a US bank account. In case your business is structured as an LP, LLC or corporation and you can link the qualifying bank account to your application, you may submit your EIN without giving your SSN.
By using this option, your businesses will receive corporate credit cards without mixing personal and financial data at all.
How Do I Build Credit With My EIN?
After getting the EIN for your business, there are a few actions that need to be taken to build the company’s credit. Let’s check them one by one together:
Obtain a D-U-N-S number
A Data Universal Numbering System (D-U-N-S) number is used to track your business credit with business credit bureaus, similar to how a Social Security Number (SSN) is used to track your personal credit history with consumer credit bureaus like Experian, Equifax, and TransUnion.
Apply for a business credit card
With a good personal credit score, you may apply for a business credit card using your EIN or even SSN.
By handling this credit line well, the company’s payment history, along with its credit utilization, will be reported to other institutions that offer credits to small businesses, thus allowing your company to build a strong business credit profile year after year.
Make timely and complete business credit card payments
Having a business credit card with you is not enough if you do not know how to manage it responsibly. To achieve this, you need to make sure you are paying your bills in full every month.
This responsible behavior not only helps you avoid interest charges and late fees but also contributes positively to your business credit score. This step demonstrates the creditworthiness of your company.
Monitor business and personal credit reports
Even with diligent financial management, mistakes that can potentially lead to a substantial negative impact on your credit scores can occur on credit reports.
As a good practice, you should request copies of both your personal and business credit reports from the respective credit bureaus at least once a year. By thoroughly reviewing these reports, you will be able to identify and address any inaccuracies promptly. This way, you’ll ensure your credit profiles accurately reflect your financial standing.
Conclusion
One of the most important steps to establish financial credibility for your company’s growth is building business credit with your EIN. Keep in mind that the EIN used for keeping the startup's financial information and personal finances separate will not only ease the business's financial needs, but also will keep your personal assets safe.
That is why maintaining a healthy credit history for your business needs to be at the top of your list of priorities, and you will find yourself in the realm of expansion and success.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
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