10 Checks to Ensure a Company is Legitimate Before Making a Purchase
In the modern digital landscape, thorough research is crucial before engaging with any company.
Whether you’re a small business or a large enterprise, the repercussions of dealing with an illegitimate company can be severe.
For example, imagine a startup signing a contract with a supplier that turns out to be non-existent.
This could result in wasted time and financial resources for the company.
It is also important to consider the impact on third parties and customers, who may require background checks to ensure legitimacy.
How to tell if the company is legit?
An infographic of how to tell if the company is legitHow to check if a business is legit for compliance
Here is a breakdown of how to find the information needed to determine the legitimacy of a business:
- Legal Name: Obtain the legal name a company is registered under from an official database, such as a state Secretary of State portal in the US, to avoid confusion with informal trade names.
- Registered Address: Check for a physical presence of the company, as a lack of one may indicate a shell corporation. Verify all addresses through official sources like state Secretary of State portals and mapping software.
- Registration Documentation: Find information that proves the business is authorized to operate in its jurisdiction. This is typically available on state Secretary of State portals or through public information requests, but services like Middesk can streamline the process by integrating with these portals.
- Industry-Specific License Documents: Some businesses require licenses from regulatory agencies specific to their industry. Check state Secretary of State portals and verify with the applicable licensing agency.
- Tax Information: Legitimate businesses will have a unique identifier for financial transactions, such as a tax identification number (TIN), employer identification number (EIN), or legal entity identifier (LEI). This information can be found on state Secretary of State portals and should be validated with tax agencies like the IRS.
What to do if you get scammed
If you suspect you’ve fallen victim to a scam, take these steps to protect yourself:
- Inform Your Bank: Contact your bank immediately to enhance the security of your current account and prevent further unauthorized withdrawals.
- Report to Action Fraud: Report the incident to Action Fraud either through their website or by calling 0300 123 2040. This helps authorities track and prevent similar scams in the future.
- Prioritize Security: Always prioritize your financial and data security when dealing with unfamiliar companies. Vigilance and thorough research are your best defenses against fraudulent activities.
By taking these steps promptly, you can mitigate the impact of scams and help prevent others from falling victim.
In conclusion, the rise of illegitimate businesses and online scams poses a significant threat to financial security and reputation.
While the steps outlined earlier are helpful, they may not be enough to protect against sophisticated fraudsters.
Gaps in these steps, such as challenges in searching public records or limitations in finding negative news, can leave individuals vulnerable to deception.
CS Business Screen offers comprehensive due diligence background checks on companies and their officers, filling in these gaps.
By providing detailed information on a business’s legal history, financial issues, business credit report, and officer/owner criminal activity, CS Business Screen helps uncover hidden risks.
This empowers individuals to make informed decisions and reduces the chances of falling victim to fraudulent schemes.
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