Verifying businesses in the US is an important step whenever you're dealing with a new company. Whether you're a consumer looking to ensure a business is legitimate before making a purchase, or a business entering into a partnership, verifying a company's registration and status can help protect you from fraud and ensure you're working with a reputable entity.
In the digital era today, businesses are more vulnerable than ever to fraudsters posing as legitimate companies. According to a Federal Trade Commission (FTC) report, business fraud cost the US economy a staggering $5.8 billion in 2021. Businesses must ensure they are dealing with real and trustworthy partners. They can do this via business verification. Here, you will get everything you need to know about how to verify businesses in the US including the requirements for verifying businesses in the US.
What is Business Verification in the US?
Business verification goes beyond a simple Google search. It is the process of confirming the legitimacy and authenticity of a business entity. It involves gathering and analyzing information about the business, such as its registration details, ownership structure, financial standing, and legal compliance.
Business verification involves a series of checks to confirm a business's legitimacy, ownership, and financial health. It's not just about protecting businesses from fraud; it's also about building trust with customers and partners, who increasingly value transparency and security in their business dealings.
If your business is new in the US, verifying your business helps other businesses recognize you as being genuine and legitimate. Going through the process will also help you recognize other illegitimate businesses and prevent you from doing business with them.
- Existence and Legitimacy: Verifying that the business is registered with the appropriate government agency and is operating legally.
- Compliance with Regulations: Ensuring the business adheres to relevant industry regulations like the Know Your Customer (KYC) and Anti-Money Laundering (AML) and licensing requirements. Regulations
- Financial Stability: Assessing the business's financial health and creditworthiness to mitigate risk.
- Ownership and Leadership: Identifying the true owners and decision-makers behind the business.
Why Verify a Business in the US: Benefits of Verification for Customers and Businesses
It is important that you verify your business and that of others before having any engagement with them for the following reasons:
1. Reduced Fraudulent Activity:
Verification helps identify companies with a history of scams, misleading information, or illegal operations. This protects businesses from financial losses and reputational damage.
2. Ensured Financial Stability:
Understanding a business's financial health is crucial. Verification helps assess creditworthiness and identify potential financial trouble that could impact a partnership.
3. Verified Licensing and Compliance:
Regulations vary by industry. Verification ensures the business holds the necessary licenses and permits to operate legally. Therefore, avoiding potential legal issues.
4. Built Trust and Confidence:
Knowing you're dealing with a legitimate business facilitates trust and confidence. It lays a strong foundation for successful partnerships. Verification allows research into a company's customer reviews, past legal actions, and overall industry standing.
5. Legal Compliance:
Verifying a business's legal status ensures you're not dealing with an unregistered or non-compliant entity. This protects you from potential legal issues and guarantees you're working with a reputable company. You may want to know the Step by-Step Guide to Conducting Business Verification for Effective Due Diligence
Requirements to Verify Business in the US
What documents do you need to verify your business in the US? There are different documents required to verify different types of businesses in the US. The documents to verify online and brick-and-mortar businesses include the following:
How to Verify Online Business (Facebook) in the US
To verify an online business in the US, you will need the following documents
- Articles of incorporation
- Business bank statement
- Business License
- Employer identification number (EIN)
- IRS SS-4 (EIN assignment letter)
- IRS 147c (EIN confirmation letter)
- Taxpayer identification number
How to Verify Brick-and-Mortar Business in the US
To verify a brick-and-mortar business in the US, you will need the following documents
- The legal name of the entity
- Employer/Taxpayer Identification Number (EIN)
- Primary place of business and US street address
- The list of shareholders who own 25% or above of the business. The list should include full name, date of birth, country of residence and the accurate percentage of shares they own*
- The list of directors. The list should include full name, date of birth, country of residence, (if applicable to your company type)
- Details of your company’s website and a brief description of what your business does.
How to Verify Businesses in the US: 5 Ways to Verify Businesses in the US
Verifying businesses in the US is crucial whenever you're dealing with a new company. Whether you're a consumer or another business, taking steps to verify businesses in the US can help protect you from fraud and ensure you're working with a legitimate entity. Here are five methods you can use to verify businesses in the US:
1. State Secretary of State Website:
This is the most reliable source for verifying a business's registration status. Each state has a Secretary of State website where you can search by business name or file number to verify businesses in the US. These websites typically offer information on the company's existence, good standing, and registered agent.
2. Better Business Bureau (BBB):
The BBB is a non-profit organization that provides business reviews and accreditation. While not a substitute for official registration, checking the BBB can offer additional insights when you verify businesses in the US. A BBB listing can provide details on a company's customer service history and complaint resolution process.
3. US Securities and Exchange Commission (SEC):
This resource is relevant for publicly traded companies seeking to verify businesses in the US. The SEC's EDGAR database provides access to public filings that detail a company's financial health, ownership structure, and history.
4. Professional Licensing Boards:
Certain professions and industries require specific licenses to operate. Verifying businesses in the US can involve checking with the relevant licensing board website (often at the state level) to confirm if a company holds the necessary licenses to perform their services.
5. Business Reviews and Online National Directories:
While online reviews and complaints should be approached with caution, they can offer some insights when you verify businesses in the US. Look for reviews on reputable platforms and consider paid business verification services that can provide more comprehensive information about a company.
A combination of these methods can provide a more complete picture of a company's actions against the business.
Conclusion
In today's digital era, thorough business verification is no longer a luxury; it's a necessity. By implementing comprehensive verification processes, you can protect your business from fraud, ensure compliance with regulations, and build stronger, more trusted relationships with your partners.
Don't wait to take action. Youverify offers advanced business verification services that utilize cutting-edge technology, access to comprehensive data sources, and a commitment to compliance. Partner with Youverify today and experience the peace of mind that comes with knowing you're doing business with legitimate and trustworthy partners. Request for a free demo to see how it works.