USWNT coach Vlatko Andonovski is setting the stage where his World Cup line-ups will be difficult to predict — which could be revered or mocked.
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And how can they affect if you can get funding? We tell you all about NAICS Codes. They could be the difference between getting business money or not getting any money.
Federal statistical agencies use the North American Industry Classification System (NAICS) . The idea is to classify business establishments. This is to collect, analyze, and publish statistical data, related to the U.S. business economy.
The NAICS was developed under the auspices of the Office of Management and Budget (OMB). Its adoption was in 1997. The intention is to replace the Standard Industrial Classification (SIC) system. The U.S. Economic Classification Policy Committee (ECPC) developed it with Statistics Canada and Mexico’s Instituto Nacional de Estadistica y Geografia. The intent was to make business stats easy to compare among North American countries.
NAICS is a 2- through 6-digit hierarchical classification system. It offers five levels of detail. Each digit in the code is part of a series of progressively narrower categories. The more digits in the code, the more classification detail.
The first two digits are the economic sector. The third digit designates the subsector. And the fourth digit designates the industry group. The fifth digit designates the NAICS industry. The sixth digit designates the national industry.
A 5-digit NAICS code is comparable in code and definitions for most of the NAICS sectors. This is across the three countries participating in NAICS. They are the United States, Canada, and Mexico. The 6-digit level lets the U.S., Canada, and Mexico all have country-specific detail. A complete and valid NAICS code has six digits.
NAICS industry codes define businesses based on the primary activities they engage in. Recently, the NAICS changed many of its codes as it updated its philosophy. It no longer sets aside online businesses. Now the NAICS no longer distinguishes businesses by how they deliver goods or services.
There is an older NAICS list of high-risk and high-cash industries. Higher risk industries on the list include casinos, pawn shops, and liquor stores. But it also included automotive dealers and restaurants. But this list is from 2014 and does not appear to have ever gotten any updating.
Per the NAICS, various professionals in the banking industry compiled the list. The idea was to use it as a working guide. But it is not an officially sanctioned list. They do not guarantee the accuracy of this list.
When considering any aspects of a business, risk must be a major factor. There are inherent issues in every single industry. But some businesses are considered to be risky by their very nature. This is the case even if everything else goes off like a hitch and the business is prospering. Risk is inherent within these business types. Even if your business doesn’t feel risky, it could be anyway.
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
The biggest reason why risk matters has to do with funding. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. But at least a company can get funding.
In some industries, no funding is available at all. As a result, those businesses will need to find other solutions for financing. These solutions can include:
Still, a lot of businesses would rather work with lenders. But where are lenders’ ideas of the degree of risk coming from? One clue comes from the CDC.
The Centers for Disease Control looks at risks in small businesses. Part of the calculation of risk comes from occupational injuries. But the other side of the risk coin is occupations which are high in cash transactions. After all, a pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean it can be a tempting target for thieves.
These industries (among many others) can get an automatic decline:
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
These industries (among many others) can be subject to stricter underwriting guidelines:
According to the older list, the following codes are among those considered to be high risk:
How do you choose a better code?
Of course you want to be 100% honest when it comes to selecting your NAICS code. But if more than one can apply, you don’t have to choose the one that’s higher risk. So it pays to check and be careful when making your selection.
Also, if only high risk codes apply, there’s nothing wrong with changing your business. Then you may be able to match a related but lower risk code. There is nothing underhanded or dishonest about doing this.
Let’s say your business is automotive transmission repair (NAICS Code 811113). We know this is a high risk code. But 811191 is not on the NAICS list. It covers Automotive Oil Change and Lubrication Shops. So why not offer oil changes and use the lower risk code? It could be the difference between getting funding, or not.
The Internal Revenue Service will use the NAICS code you select. This is to see if your business tax returns are comparable to other businesses in your industry. If your deductions do not reasonably resemble other businesses in your industry, your business could be subject to an audit.
The IRS may label some companies as high-risk when they do not choose the right NAICS code. But if you know how the system works, then you can choose the correct code on your first try.
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
Lenders, banks, insurance companies, and business CRAs all use codes. They tend to use both NAICS and SIC Codes. SIC Codes are the older business classification system. D&B uses both SIC and NAICS Codes.
OSHA uses NAICS Codes for industry identification in its data. These agencies use them to determine if your business is in a high-risk industry. So you could get a loan or business credit card denial based on your business classification. Some SIC codes in particular can trigger automatic turn-downs. You could end up paying higher premiums, and get reduced credit limits for your business.
Will a better NAICS code guarantee funding for your business venture? Of course it won’t. But at least your business will not be automatically turned down before you can make a case for funding.
Industries are defined by codes from the North American Industry Classification System. Codes go up to six digits for the most granular information. Some codes are always associated with high risk. This makes it harder to get business funding. So if more than one NAICS code can apply to your business, pick the one that’s less risky.
The post In Just a Few Minutes of Your Time, Learn All About Avoiding Risky NAICS Codes appeared first on Credit Suite.
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And how can they affect if you can get funding? We tell you all about NAICS Codes. They could be the difference between getting business money or not getting any money.
Federal statistical agencies use the North American Industry Classification System (NAICS) . The idea is to classify business establishments. This is to collect, analyze, and publish statistical data, related to the U.S. business economy.
The NAICS was developed under the auspices of the Office of Management and Budget (OMB). Its adoption was in 1997. The intention is to replace the Standard Industrial Classification (SIC) system. The U.S. Economic Classification Policy Committee (ECPC) developed it with Statistics Canada and Mexico’s Instituto Nacional de Estadistica y Geografia. The intent was to make business stats easy to compare among North American countries.
NAICS is a 2- through 6-digit hierarchical classification system. It offers five levels of detail. Each digit in the code is part of a series of progressively narrower categories. The more digits in the code, the more classification detail.
The first two digits are the economic sector. The third digit designates the subsector. And the fourth digit designates the industry group. The fifth digit designates the NAICS industry. The sixth digit designates the national industry.
A 5-digit NAICS code is comparable in code and definitions for most of the NAICS sectors. This is across the three countries participating in NAICS. They are the United States, Canada, and Mexico. The 6-digit level lets the U.S., Canada, and Mexico all have country-specific detail. A complete and valid NAICS code has six digits.
NAICS industry codes define businesses based on the primary activities they engage in. Recently, the NAICS changed many of its codes as it updated its philosophy. It no longer sets aside online businesses. Now the NAICS no longer distinguishes businesses by how they deliver goods or services.
There is an older NAICS list of high-risk and high-cash industries. Higher risk industries on the list include casinos, pawn shops, and liquor stores. But it also included automotive dealers and restaurants. But this list is from 2014 and does not appear to have ever gotten any updating.
Per the NAICS, various professionals in the banking industry compiled the list. The idea was to use it as a working guide. But it is not an officially sanctioned list. They do not guarantee the accuracy of this list.
When considering any aspects of a business, risk must be a major factor. There are inherent issues in every single industry. But some businesses are considered to be risky by their very nature. This is the case even if everything else goes off like a hitch and the business is prospering. Risk is inherent within these business types. Even if your business doesn’t feel risky, it could be anyway.
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
The biggest reason why risk matters has to do with funding. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. But at least a company can get funding.
In some industries, no funding is available at all. As a result, those businesses will need to find other solutions for financing. These solutions can include:
Still, a lot of businesses would rather work with lenders. But where are lenders’ ideas of the degree of risk coming from? One clue comes from the CDC.
The Centers for Disease Control looks at risks in small businesses. Part of the calculation of risk comes from occupational injuries. But the other side of the risk coin is occupations which are high in cash transactions. After all, a pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean it can be a tempting target for thieves.
These industries (among many others) can get an automatic decline:
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
These industries (among many others) can be subject to stricter underwriting guidelines:
According to the older list, the following codes are among those considered to be high risk:
How do you choose a better code?
Of course you want to be 100% honest when it comes to selecting your NAICS code. But if more than one can apply, you don’t have to choose the one that’s higher risk. So it pays to check and be careful when making your selection.
Also, if only high risk codes apply, there’s nothing wrong with changing your business. Then you may be able to match a related but lower risk code. There is nothing underhanded or dishonest about doing this.
Let’s say your business is automotive transmission repair (NAICS Code 811113). We know this is a high risk code. But 811191 is not on the NAICS list. It covers Automotive Oil Change and Lubrication Shops. So why not offer oil changes and use the lower risk code? It could be the difference between getting funding, or not.
The Internal Revenue Service will use the NAICS code you select. This is to see if your business tax returns are comparable to other businesses in your industry. If your deductions do not reasonably resemble other businesses in your industry, your business could be subject to an audit.
The IRS may label some companies as high-risk when they do not choose the right NAICS code. But if you know how the system works, then you can choose the correct code on your first try.
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
Lenders, banks, insurance companies, and business CRAs all use codes. They tend to use both NAICS and SIC Codes. SIC Codes are the older business classification system. D&B uses both SIC and NAICS Codes.
OSHA uses NAICS Codes for industry identification in its data. These agencies use them to determine if your business is in a high-risk industry. So you could get a loan or business credit card denial based on your business classification. Some SIC codes in particular can trigger automatic turn-downs. You could end up paying higher premiums, and get reduced credit limits for your business.
Will a better NAICS code guarantee funding for your business venture? Of course it won’t. But at least your business will not be automatically turned down before you can make a case for funding.
Industries are defined by codes from the North American Industry Classification System. Codes go up to six digits for the most granular information. Some codes are always associated with high risk. This makes it harder to get business funding. So if more than one NAICS code can apply to your business, pick the one that’s less risky.
The post In Just a Few Minutes of Your Time, Learn All About Avoiding Risky NAICS Codes appeared first on Credit Suite.
Are you feeling inspired to change the name of your business? It’s understandable. Sometimes something just strikes you as perfect and you feel you need to take action right away. However, you might want to hold off on that for a minute. Don’t change your business name until you understand how risky it is.
Even if the name of your business is super boring right now and you have an idea for the catchiest name ever, it is a big risk to change your business name. The name of your business is incredibly far reaching. It is on all insurances, licenses, bank accounts, credit accounts, and it is tied to your EIN if you have one.
Imagine, every legal document and identification number that relates to your business has your business name on it. Furthermore, if you have a web presence, your social media accounts and website connect to that name. If your URL has your business name in it, that complicates things even further.
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
Of course, you’re thinking you’ll just change it in all the places and you’ll be good. That’s great, but what if you forget something random from a long time ago? What if your business name is on a document you forgot even exists? You may not think it matters much, but it does. Your business name can affect almost every aspect of fundability. Do you know why it’s risky to change your business name? Understanding exactly what fundability is and what affects it can go a long way toward helping you understand.
Fundability is the ability of your business to get funding. When lenders look at funding your business, they consider if it is a good idea to make the loan. What do they look at to make that determination? It’s a lot more than you may think, and I guarantee that it reaches further than you realize.
The first aspects of fundability have to do with how your business is set up.
This is your business phone number and address that is separate from your personal phone number and address. That may not mean you have a separate phone line, or even a separate location however.
Honestly, you can get a business phone number and fax number pretty easily that will work over the internet instead of phone lines. Then, the phone number will forward to any phone you want it too so you can simply use your personal cell phone or landline. Whenever someone calls your business number it will ring straight to you.
You can use a virtual office for a separate business address. This isn’t what you may think. A virtual office is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services. In addition, there are some that offer meeting spaces for those times you may need to meet a client or customer in person.
But imagine if your phone number and address are listed under one name, and then you change the business name. It is complex and time consuming to change your information everywhere. Something is almost certain to get missed, and customers are going to be confused.
This is an identifying number for your business that works in a way similar to how your SSN works for you personally. You can get one for free from the IRS. However, if you change your business name, you’ll have to make sure you have an EIN that is attached to the new name. Furthermore, you’ll have to ensure all the accounts that you have using that EIN are changed to reflect your new name.
Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability. It lends credence to your business as one that is legitimate. It also offers some protection from liability.
Which option you choose does not matter as much for fundability as it does for your budget and needs for liability protection. It’s best to talk to your attorney or a tax professional about that issue. However, when you incorporate you are going to lose the time in business that you already have. You essentially become a new entity. Basically, you have to start over. You’ll even lose any positive payment history you may have accumulated.
This is why it is important to incorporate as soon as possible. Is necessary for fundability and for building business credit, but so is time in business. The longer you have been in business the more fundable you appear to be in the eyes of lenders. That starts on the date of incorporation, regardless of when you actually started doing business.
If you want to change your business name and you are not yet incorporated, then when you do incorporate is the best time to make it happen. Do it sooner rather than later.
You should already have a separate bank account for your business transactions. If you don’t, you need to make that happen now. There are a few reasons for this. First, it will help you keep track of business finances. It will also help you keep them separate from personal finances for tax purposes.
There’s more to it however. There are several types of funding you cannot get without a business bank account. Many lenders and credit cards want to see one with a minimum average balance. In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments. Studies show consumers tend to spend more when they can pay by credit card.
Now, here is how your business name, and the risk when you change your business name, comes into play. This account has to be in your business name. If you change that name, you’ll have to go through the hassle of changing the name on that account. Not only that, but if you have any drafts coming out, you will have to make sure information is updated with those accounts. Otherwise, you could end up with unpaid bills.
For a business to be legitimate it has to have all of the necessary licenses it needs to run. If it doesn’t, warning signals are going blare. Do you know what else will set off some major red flags? If your business name and the name on your license do not match.
I am sure you are wondering how a business website can affect your ability to get funding. Think about it. These days, if you don’t have a website you may as well not even exist. Yet, having a poorly put together website can be even worse. It is the first impression you make on many, and if it appears to be unprofessional or confusing it will not bode well for you with consumers or potential lenders.
Spending the time and money necessary to ensure your website is professionally designed and works well is vital. Paying for hosting is important too. Don’t use a free hosting service. Also, your business needs a dedicated business email address. It should have the same URL as your Website.
Now, imagine your URL and email are tied to your business name. If you change that, you have to redesign your whole site to reflect the new name. Changing those things takes time and money. That’s not even to mention how confused people will be when they do an internet search for your business using a different name, or when they get to your website and see a name they aren’t expecting.
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
These are reports, like your personal credit reports, that detail the credit history of your business. It is a tool to help lenders determine how credit worthy your business is.
Where do business credit reports come from? There are a lot of different places, but the main ones are Dun & Bradstreet, Experian, Equifax, and FICO SBSS.
Lenders see this report. They rely on it heavily when it comes to making lending decisions. Even if your business credit is stellar, seeing your business listed under a bunch of different names can cause a problem. They start worrying about things like fraud, and that can cause an automatic denial.
Even worse, if things aren’t taken care of properly, you could end up with accounts reporting to two different credit reports, wrong accounts on wrong reports, or some other confusing credit report fiasco simply from choosing to change your business name.
In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly. Two examples of this are LexisNexis and The Small Business Finance Exchange. These two agencies gather data from a variety of sources, including public records. This means they could even have access to information relating to automobile accidents and liens. While you may not be able to access or change the data the agencies have on your business, you can ensure that any new information they receive is positive. Enough positive information can help counteract any negative information from the past.
The same issues apply. If your business name doesn’t match across the board, lenders could get uncomfortable.
In addition to the EIN, there are identifying numbers that go along with your business credit reports. Some of them are simply assigned by the agency, like the Experian BIN. Some, like a D-U-N-S number, you have to apply for, of course using your business name.
Here’s another place where you have to follow through if you change your business name. You have to make sure your new name isconnected to your old D&B number, or get a new number. It can become very complicated.
Then other numbers, like your BIN from Experian, will need to be updated as well.
Your credit history has everything to do with everything related to your credit score, which is a huge factor in the fundability of your business.
Your credit history consists of a number of things including:
Learn more here and get started with building business credit with your company’s EIN and not your SSN.
The more accounts you have reporting on-time payments, the stronger your credit score will be. I’ve already touched on this above. When you change your business name, this information can become very confusing unless you handle things very carefully. The less confusing things are for lenders, the better.
When you change your business name, you start a sort of domino effect. The problem is, the dominos weave in and out of a spider web formation that reaches further than you can probably imagine. If just one is out of place the whole thing can fall. Lenders hone in on discrepancies, and sometimes the result is simply denial. No questions asked, they just deny the loan based on too many inconsistencies.
The only really good time to change your business name is when you incorporate. Still, even then it is best not to. Consistency is key, and trying to backtrack and make changes everywhere they need to be made costs time and money. Trying to explain gaps and changes on a report and how everything ties together is even riskier. The more complicated things are, and the harder a lender has to work to see that you are fundable, the less likely approval becomes.
To make a long story short, you need to carefully weigh any benefit you think you may gain from changing your business name against all the costs. While there could be a few very specific situations where this isn’t the case, as a general rule the benefit doesn’t outweigh the cost.
The post Why It’s Risky to Change Your Business Name appeared first on Credit Suite.
Financial services organisations (FSOs) are expected to meet strict financial crime regulations regardless of their size, and those with smaller budgets and fewer resources are finding this increasingly difficult as regulations, guidelines and threats continue to evolve. Regulators are also expecting FSOs to use the risk-based approach to target their anti-money laundering compliance resources. Risk.net hosted a webinar in association with NICE Actimize on the benefits of a risk-based approach to combat money laundering and other forms of financial fraud
The post Managing AML and fraud – A risky business needs a risk-based approach appeared first on Buy It At A Bargain – Deals And Reviews.
All businesses can potentially have problems getting loans during a recession. This is the nature of an economic downturn – funding tends to dry up. Higher-risk businesses have problems even in the best of economic times. But when you put them both together, you get risky SIC codes in a recession.
If funding possible at all? While SIC codes may or may not matter for SBA Paycheck Protection Program funding, they do matter elsewhere.
Do you know which SIC codes get you denied? But before we go any further, just what is a SIC code, anyway?
The SIC Code (Standard Industrial Classification) is a part of a business classification system.
A Standard Industry Classification code, or SIC is a four digit numerical code which is assigned by the U.S. government to businesses, to make it easier to identify the primary activity of the business. It is an indicator of the kind of business a company is in.
The Securities and Exchange Commission developed this system. For example, if your company makes tires and/or inner tubes, then your SIC code would be 3011. The numbers are somewhat intelligent in that there are ranges of industry groups which correspond to the first of the four digits, such as manufacturing corresponds to four-digit SIC codes which start with either a 2 or a 3.
The combination of the first and second digits then defines the major industry group. In our example, 30 will designate ‘Rubber and Miscellaneous Plastic Products’.
The SIC code’s digits are grouped to identify the industry and industry group. The first two digits in the SIC code identify the major industry group, the third digit identifies the industry group and the fourth digit identifies the industry.
In fact, the Internal Revenue Service will use the SIC code that you select. This is in order to determine if your business tax returns are comparable to the other businesses in your industry. Hence, if your tax deductions do not reasonably resemble the other businesses in your industry, your business could be audited.
Furthermore, some companies may be labeled high-risk when they do not select the right SIC codes to classify their company. However, if you understand how the business classification system works, then you can choose the correct code on your first try.
Demolish your funding problems with our rock-solid guide about 27 killer ways to get cash for your business.
The North American Industry Classification System (NAICS) is another business classification code.
This code classifies business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. economy. NAICS industry codes define establishments based on the activities in which they are primarily engaged.
The NAICS puts out its own list of high-risk and high-cash industries. Higher risk industries on the list include casinos, pawn shops, and liquor stores, but also automotive dealers and restaurants.
OSHA requires injury and illness reports from certain high-risk industries.
They both are. However, the SIC code system is phasing out and NAICS will replace it. But for the moment, assume they are both in play, as the transition has not yet finished. These coding systems are similar but not identical.
Lenders, banks, insurance companies and business credit reporting agencies use the two business classification systems to determine if your business is a high-risk industry classification. This means that you could get a denial for a loan or a business credit card based on your business classification. Some SIC codes can trigger automatic turn-downs, higher premiums, and reducing credit limits for your business.
Demolish your funding problems with our rock-solid guide about 27 killer ways to get cash for your business.
When considering any aspects of a business, risk has to be a major factor. There are inherent issues in every single industry. Crops fail, lease terms go up too high so a company has to move, or tariffs or even a war make importing less reliable.
But some businesses are considered to be risky by their very nature. And this is the case even if everything else goes off like a hitch and the business is prospering. Risk is inherent within these business types. Therefore, even if your business doesn’t feel risky, it just might be anyway.
The biggest reason why risk matters has to do with funding. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. But at least a company can get funding.
Not so with other industries. In some industries, no funding is available at all. As a result, those businesses will need to find other solutions for financing. These solutions can include, potentially, crowdfunding, angel investors, venture capital, business credit building and more.
Still, a lot of businesses would rather work with lenders. But where are lenders’ ideas of the magnitude of risk coming from?
In 1999, the Centers for Disease Control published an article on risks in small businesses. This article contains information on SIC codes. And it gives information on injuries associated with the codes. While this is not the true means by which lending institutions decide on risk, it is still of interest. And it can demonstrate what may be behind some of the reasoning.
Part of the calculation of risk comes from occupational injuries. These are such as those noted in the CDC report. But the other side of the risk coin is occupations which are high in cash transactions. After all, a pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean that it can be a tempting target for thieves.
The choice of SIC code is yours. For automotive sales, for example, you would normally select 5511, ‘Motor Vehicle Dealers (New and Used)’. But most lenders will automatically turn your business down because of the high-risk factor within the business classification name. Of course you want to be honest with your SIC coding classification. But if more than one SIC code could apply, there is nothing wrong with choosing the SIC code which will not get you denied by lenders.
Therefore, if you want to have your automobile sales company, you need to develop a business code which has auto and home supply stores, motor vehicle parts and accessories, or car washes written in the actual business code. That way, you can still operate your real business of “automotive sales” without actually being considered a risk factor.
There is nothing deceptive or dishonest about doing this.
Check the SIC code database for more information on these codes.
Demolish your funding problems with our rock-solid guide about 27 killer ways to get cash for your business.
Beyond coming up with the perfect memorable name which is easy to spell and say, and evokes your company’s mission statement, there’s also the matter of risk. Adding a risky business type into your business name will trigger financing denials.
For example, bail bonds are a restricted industry. So are many types of financing business types, and check cashing agencies. Hence naming your venture Chico’s Bail Bonds is a recipe for a delay if not an outright denial.
But it is the same as with choosing a lower-risk SIC code when two apply. There is nothing deceptive, illegal, or unethical in naming your company Chico’s.
Will this more generalized name guarantee funding for your business venture? Of course it won’t. But at least your business will not be automatically turned down before you can make your case for funding.
Choosing the incorrect SIC codes could end up costing your business and get you labeled as high-risk. And this could directly impact your insurance premiums, your financing ability, and even your credit limit recommendations. This small error of choosing the wrong SIC codes could cost your business in the future. Therefore, be sure to do your research before you select any SIC codes for your business. Because you might just end up choosing risky SIC codes in a recession. And those could get you a denial. And it does not have to be that way.
The post Risky SIC Codes in a Recession: The Ugly Truth of Risk and Skittish Lenders appeared first on Credit Suite.