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Researching a Company - Part 1
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Researching a Company - Part 1
Most business owners dedicate countless hours of time and money to ensure that their business is in compliance with all federal, state, and local regulations - but what about the businesses you work with? An essential aspect of running a business is verifying that your vendors and suppliers are up to par, since their standings can affect your operations and reputation. This fact sheet provides guidance on what to information look for - and where to find it - when yo;re researching another company.
Business Name Registration
The legal name of a business is the name of the person or entity owns it. If a business operates under a different name, then they will likely file a DBA, or 'fictitious name', registration form with their state or county government agency. The DBA- or-doing business a'' is the name that you recognize the business as (for example, Smith Supply Co.). However, it is the legal name (John Smith, LLC) that is required on all government forms and applications, including employer tax IDs, licenses and permits.
To find another busines's legal name, choose a state for local DBA filing requirements. If the busines's home state requires this registration, visit their Secretary of State office to perform a business entity search. This search will enable you to find out if a business has properly registered their name with the state.
Certificate of Good Standing
A certificate of good standing is a state government-issued document that declares a business is in existence or authorized to transact business in that state. This certificate acts as official evidence that the company is in compliance with all state-required laws and regulations.
A certificate of good standing generally establishes that a business has met specific criteria including:
- The business is registered, incorporated, or otherwise authorized to conduct business in that state.
- The business has paid all costs and fees owed to the state.
- The business has correctly filed and paid all applicable taxes.
- The business has filed all applicable documents with the state.
Businesses obtain certificates of good standing for many reasons - as a requirement to complete certain business operations, as a way of proving to customers and other businesses that all regulations have been met, and as evidence that a previously delinquent company has become compliant again. Although they can serve many purposes, the lack of a certificate of good standing does not necessarily mean that a business is not in compliance with applicable laws.
All certificates of good standing can be verified through the issuing state's secretary of state office. Certificates generally use some form of an authentication number that is used to find the corresponding records. To verify a busines's proof of compliance, visit the state Secretary of State office where the business is registered to enter the authentication number and determine its status. For example, the Illinois Verification System shows a typical certificate of good standing verification system.
Business and Professional Licenses
Every business needs one or more federal, state or local licenses to operate. Licensing requirements can range from a basic operating license to very specific permits. To verify whether or not a business possesses all applicable business and professional licenses, visit your state government's website. Information varies by location, but each state a business portal to search for these licenses. For example, the Florida Department of Business and Professional Regulation has a licensee search that provides information about applicants and licensed individuals that require licensure. Search results can be found using a name, license number, location, or license type.
I's possible that a business has filed the appropriate forms and seems legitimate but could still be under investigation for issues such as fraud or bankruptcy. If yo're considering buying a business, being coming financially involved with, or plan to work closely with another entity, you should take additional steps to find out as much information as possible about a busines' financial and legal status. The Legal Steps to Buying a Business has more information on further research, looking for red flags, and getting a full financial picture.