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Author Topic: Establishing and building a credit rating for a sole proprietor sound co.  (Read 2964 times)

bruce gering

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I just received a phone call from Dunn and Bradstreet, notifying me that another party had made in inquiry about my business. Then they went on to say that there was no record of any credit transactions or ratings for the business, which is a sole proprietor afa tax purposes go. So far, I have a phone plan, credit card, and deal with a small handful of suppliers on a pay-as-you-purchase basis. I have had the phone and credit card for years now, but it does not show up. i am proud to say that I've never been in debt and never borrowed for the business, perhaps it may be wise to set up a small loan?

Dunn & Bradstreet offered to help...at a hefty monthly fee of course! I politely turned then down, but it got me to thinking: How do I go about getting "on the grid" afa a credit rating goes? I am starting to move up into the festival provider for some of the local organizations, and the fact that I don't have a credit rating could hurt me by scaring off a potential client.

Of course, I could always go with D&B, but this is something i should be able to do on my own, without the fees they charge.

Anyone else go through this and if so, how did you go about getting "on the grid"?
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thomas jones

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I have been in business for years. The 1st thing is to obtain an LLC for your company. Then you can begin to establish credit under that name using your personal credit worthiness as collateral. Obtain a credit card under your business name and buy some stuff that you need. Then you are on your way. An LLC can be had for around $300 I think. You might want to talk to a tax savvy lawyer to explain the advantages and pitfalls. Good Luck!
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Randall Hyde

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I just received a phone call from Dunn and Bradstreet, notifying me that another party had made in inquiry about my business.
First off, don't assume that another party actually made such an inquiry. This could very well be a "marketing ploy" on D&B's part.

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Then they went on to say that there was no record of any credit transactions or ratings for the business, which is a sole proprietor afa tax purposes go. So far, I have a phone plan, credit card, and deal with a small handful of suppliers on a pay-as-you-purchase basis. I have had the phone and credit card for years now, but it does not show up. i am proud to say that I've never been in debt and never borrowed for the business, perhaps it may be wise to set up a small loan?
Let me suggest to you the same thing I suggest to all the local soundco wannabees I talk to: avoid credit as much as you possibly can. Especially, don't get a loan for the sake of "building up credit." Incorporate and get a business credit card. Put your monthly purchases on that and pay the card off each month if at all possible. By all means keep current on your payments.  That will prove sufficient.

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Dunn & Bradstreet offered to help...at a hefty monthly fee of course!
Providing even more credence to the theory that it's a marketing scam.

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I politely turned then down, but it got me to thinking: How do I go about getting "on the grid" afa a credit rating goes? I am starting to move up into the festival provider for some of the local organizations, and the fact that I don't have a credit rating could hurt me by scaring off a potential client.
I'm not sure why I would understand why that would scare off a client. You're not borrowing money from them. OTOH, it *might* make it difficult to rent gear from a rental house if you need to do that. My suggestion is to stick to shows you can do with your existing inventory while you build up your inventory. You claim to be a sole proprietorship; that largely means you're doing relatively small shows (I wouldn't expect you to be running a crew if you're not incorporated and everything that goes along with dealing with employees).

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Of course, I could always go with D&B, but this is something i should be able to do on my own, without the fees they charge.

Anyone else go through this and if so, how did you go about getting "on the grid"?
I've been doing this for about 6-7 years now and I've only had a few inquiries about my credit worthiness (generally when renting larger stages than I own). Paying in advance for the rentals solved those problems.  Stages and backline are all I've ever rented; the rental company delivered and retrieved their gear on the day of the event so there was never many issues concerning long-term wear and tear or damage.

Most of my clients have been *far* more concerning about my liability insurance than my credit worthiness. Some of my clients have been extremely concerned about my employees: they wanted proof that they were actual employees and not subcontractors (there were issues concerning liability with respect to workman's compensation insurance and stuff like that). I've also low-balled a couple of bids and gotten into trouble because the client didn't think I could do the job for the amount quoted (stupid me, leaving that money on the table). But again, I've never had a client be concerned about my credit worthiness.
Cheers,
Randy Hyde

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Robert Weston

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The D&B call is a marketing ploy!!  If anyone calls you that you have never had contact with, hang up on them.  Also, you may want to add your number to the national "Do Not Call" list.  If people/companies call you, they can be fined.

As was mentioned before, establish yourself as an LLC.  It can be easy or complicated (depending on what state you are in).  Go to your states' Secretary of State website and look for LLC.  Get a credit card under your company name and use it wisely.
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John Sabine

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The Dunn and Bradstreet thing is definitely a marketing ploy by them. When I first went into business I fell for it and paid for their BS for several years, then dropped it and nothing changed. No one seems to check that.
Getting the LLC is definitely a good move as is consulting an accountant as to what type of structure would be best for you. I started out as an S-Corporation because there was no such thing as an LLC in my state then.
One thing to also take into consideration is insurance. Most gigs don't ask for it but a few of my better contractors require it. It's one of those things that may seem unnecessary right now but let that idiot at the frat party take a dive off of a speaker and lack of it becomes very scary very fast.
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bruce gering

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The Dunn and Bradstreet thing is definitely a marketing ploy by them. When I first went into business I fell for it and paid for their BS for several years, then dropped it and nothing changed. No one seems to check that.
Getting the LLC is definitely a good move as is consulting an accountant as to what type of structure would be best for you. I started out as an S-Corporation because there was no such thing as an LLC in my state then.
One thing to also take into consideration is insurance. Most gigs don't ask for it but a few of my better contractors require it. It's one of those things that may seem unnecessary right now but let that idiot at the frat party take a dive off of a speaker and lack of it becomes very scary very fast.

I was an LLC, but had to drop it because my wife, who was listed as my partner, has since passed on. This state does not allow a corporation of just 1 member, at least that's what my Lawyer as well as my tax accountant tells me. I do have liability ins. as well as an Inland Marine equipment rider to cover my investment. I kinda thought the D&B thing was just a ploy to make them money, but I thought I'd ask.
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Josh Duke

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The Dunn and Bradstreet thing is definitely a marketing ploy by them. When I first went into business I fell for it and paid for their BS for several years, then dropped it and nothing changed. No one seems to check that.
Getting the LLC is definitely a good move as is consulting an accountant as to what type of structure would be best for you. I started out as an S-Corporation because there was no such thing as an LLC in my state then.
One thing to also take into consideration is insurance. Most gigs don't ask for it but a few of my better contractors require it. It's one of those things that may seem unnecessary right now but let that idiot at the frat party take a dive off of a speaker and lack of it becomes very scary very fast.

I was an LLC, but had to drop it because my wife, who was listed as my partner, has since passed on. This state does not allow a corporation of just 1 member, at least that's what my Lawyer as well as my tax accountant tells me. I do have liability ins. as well as an Inland Marine equipment rider to cover my investment. I kinda thought the D&B thing was just a ploy to make them money, but I thought I'd ask.

You from MA?  It's the same here with LLCs.  I hate this state.

Sorry to hear of your wife's passing, Bruce.
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Brad Weber

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I was an LLC, but had to drop it because my wife, who was listed as my partner, has since passed on. This state does not allow a corporation of just 1 member, at least that's what my Lawyer as well as my tax accountant tells me. I do have liability ins. as well as an Inland Marine equipment rider to cover my investment. I kinda thought the D&B thing was just a ploy to make them money, but I thought I'd ask.
Since the laws do vary by state, talk to your attorney and accountant again, if a LLC is not possible a C-Corp or S-Corp may be feasible.  Being able to put everything in the company's name may be beneficial as you grow and the associated resources and risks increase.
 
I did have to register with D&B to get a DUNS number, which can be done for free if you don't need it right away, as some of my contracts require that.  I turned down the offers that were much like yours, however I do have to say that in my case it was quite possible that someone actually had checked my credit right about that time, although that may have been coincidence.
 
I just had a client require a $2,000,000 per occurrence Umbrella Liability coverage on top of my existing $1,000,000 General Commercial and $1,000,000 Professional Liability coverages.  All I am doing for them is system design for a conference room, classroom and small auditorium, however they do not differentiate the insurance requirements based on the size or scope of the Contract and thus refused to sign a Contract until they had a Certificate of Insurance showing all of their 'standard' coverage.  I've found many corporate and government clients to be that way, they have a boilerplate Contract and the purchasing people are simply checking whether they have all the defined paperwork, they're not really open to changing it 'just for you'.  This was also one of the clients who required a DUNS number.
« Last Edit: April 19, 2011, 02:37:35 pm by Brad Weber »
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Gary Phillips

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It should also be noted that Dun & Bradstreet doesn't bother to verify any of the information reported to them by their "members".  I was made aware of this when Sprint double-billed me for phone service during their takeover of Nextel, and then reported the non-payment of the second (erroneous) bill to D & B.  D & B, to this day, refuses to change the bad information.

A great business.

gp
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Jonathan Johnson

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Since the laws do vary by state, talk to your attorney and accountant again, if a LLC is not possible a C-Corp or S-Corp may be feasible.  Being able to put everything in the company's name may be beneficial as you grow and the associated resources and risks increase.

One advantage of incorporating is that you may be able to separate your personal assets from your business, preventing the loss of personal assets in the event of a professional liability action.

Of course, this varies by state and form of corporation, so be sure to bring this up with your lawyer or accountant to make sure you're protecting yourself in the best possible way.
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Stop confusing the issue with facts and logic!

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