In an age where we regularly shop online and do business with companies we only interact with over the Internet, it is essential to verify a business before sharing any information or sending money. Fortunately, consumers may access a number of online resources to find out if a company is legitimate. Whenever encountering a new business, you should be on the lookout for red flags.
The first place to verify the legitimacy of a limited liability company is the state where the LLC is located. If information about the LLC's location is not available on its website, contact the company to ask. If the LLC is unwilling to provide its location, you should not do business with the company. Once you know where the business is, contact the secretary of state in that state. Oftentimes, you will find there is a searchable online database for businesses that will allow you to see if the LLC is registered.
Better Business Bureau
The Better Business Bureau maintains an online database which rates businesses on a scale from A+ to F. The rating is based on how long the company has been in business and the number of consumer complaints filed against the company. Further, for many companies, the database provides the location of the business, names of people to contact and alternative business names. Although the BBB does not provide information as to whether or not the LLC is registered with the state, you can acquire more information to decide if it is safe to do business with the LLC. To access the database, visit the BBB search engine on its website.
Read More: Is a Business License Needed to Form an LLC?
You may complete further research on an LLC by visiting a number of other websites that keep track of reports of Internet fraud and scams. Often, the attorney general's website in the state where the LLC is located will have updated information on the most recent reports of consumer fraud. You may also search privately owned websites such as Scambusters, which is dedicated to warning consumers about Internet scams.
Because online businesses frequently change their name, or may assume the name of a registered LLC, the best way to verify the legitimacy of a company is to be on the lookout for red flags. For example, a legitimate company would not pressure you to quickly invest or make a purchase, nor would it only accept payment via mailed money orders. You should research common tactics used by Internet scams, such as the promise to get rich quick, so you know when to avoid a company.
Elizabeth Rayne earned her J.D. from Penn State University and has been practicing law since 2009, advising clients on issues ranging from employment law to nonprofit management. For two years, she served as a contributing editor for the "Vermont Environmental Monitor."