On 7/5/2013 4:43 PM, Ned Simmons wrote:
On Fri, 05 Jul 2013 11:00:02 -0500, wrote:

On 7/5/2013 10:38 AM, dpb wrote:
On 7/5/2013 10:16 AM, dpb wrote:
...
...

One last point...if you _don't_ have open accounts w/ your local
distributors of whatever "stuff" you routinely use, consider doing
so...whether it's the fuel supplier, the tire shop, a general
parts/tooling house, even the local Ace Hardware you use regularly will
take business credit app's...use whoever/whatever are your local
suppliers to help (again, of course, assuming you have such, and if you
don't consider cultivating same).

OK, so I thought of one more nit...

If you do this, then be certain to use those accounts _only_ for
business stuff--you don't want to be mixing up personal and business
accounts and have to then justify stuff as business expense on taxes if
there's obviously some stuff that isn't mixed in.

Most of this stuff has been mentioned, but here's what's worked for me
over the past 30+ years and 4 business entities, both proprietorships
and S corps.

-Set up a line of credit. The fact that it exists is more important
than how you use it. It demonstrates that your bank is comfortable
extending credit, i.e., they've done some of the work that a
prospective vendor would need to do, especially for business with no
credit history. Make sure to include in your credit references the
contact info of the bank officer you'd like to respond to inquiries.
Let it lapse after you have a couple years history, if you don't need
the financing.

-Prepare a pdf of credit references that you can email or hand to
vendors. Very few places will require you to fill out their form if
you supply the info they request on your form. Four vendor references,
bank info, EIN, and resale certificate, if applicable, will satisfy
most businesses.

-Establish open accounts with the places you're currently paying cash,
especially those who know you personally. Use them as references.

-D&B is a waste of time and money for most small businesses. The
number of annoying calls I've received from D&B far exceeds the
requests from vendors for a DUNS number.

-When processing a credit app, most vendors seem to call only a couple
of the references listed. I have 4 references on my standard form,
including McMaster-Carr. I only learned recently, from someone who
actually insisted on checking all 4, that McMaster does not respond to
credit checks.

-As far as I know, your credit score is irrelevant. As I said above,
it seems most checks involve a call to a couple references about how
much credit they've extended to you and what your repayment pattern
has been.

-When selecting your references, pick those that offer early payment
discounts, and take advantage of it. New vendors like to hear that you
pay "on discount." And where else are you going to get 1% or 2% per
month on your money these days?

-Twenty years ago few of the sort of vendors I deal with accepted
credit cards, now the opposite is true. When dealing with a new vendor
I'll usually ask whether they prefer to spend the time processing a
credit app, or pay the couple percent vig to the CC company.

-Last I knew, the advice given by someone else that business CCs don't
offer the same protections as consumer CCs is accurate. Same holds for
debit cards. So while a debit card on my corporate acount would be
convenient, I'm reluctant to use one. (My personal debit card has been
compromised twice in the past 5 years.)


+1

Very good synopsis...agree and coincides w/ my experience when setting
up the consulting as new entity almost entirely having the bank
reference and other vendor open accounts.

I don't use the debit card part because it doesn't have the protection
so while one of the cards is combo by what the bank put in their side
I've never activated the PIN from my side.

I agree there's not the consumer protection on business credit
cards--one has to judge on what points one wants the convenience and
weigh the risks. AmEx Small Business was pretty vigilant in their
monitoring and gave heads-up on out-of-ordinary activity. Of course,
again, one doesn't have the $50 limit protection, granted.

Perhaps the better solution is to retain a personal card that is only
used for business--don't know if comes to audit what IRS will do about
questioning such expenses; never had to deal with that side of a
potential "gotcha'!". I suppose I'd just sick the CPA on it and let him
sort it out...

--