Establishing business credit begins by separating your personal credit from your business credit. That way if your business fails, your personal credit doesn’t have to be destroyed too. In the reverse if you do not separate your personal credit from your business credit and your personal credit takes a down turn, then your business credit may also be negatively impacted.
To separate your personal credit from your business credit there are several steps you must take. First you need to incorporate or form an LLC. Your business must be an entity unto itself in order to build business credit. Otherwise you be "in business", but you are not "a business".
By definition sole proprietors and partnerships are personally liable for everything the business does, including all its debts. Therefore it is impossible to separate personal from business credit under those forms of business ownership.
Next, you must have a Federal EIN and open a separate bank account under the exact legal name of the business. Then, you must obtain all necessary business licenses, permits, etc. that are required and your business must have a separate phone line that is listed in the phone directory in the exact business legal name.
Now, you must open a business credit file with all three business credit reporting agencies. The next step is to obtain five vendors and/or suppliers that will extend a small amount of credit to your business and report your payment histories to the agencies.
Then, you will need to obtain three business credit cards that are not linked in any way to you personally and that report to the business credit reporting agencies. And then you must pay all your bills on time.