What Kind of Business Tells You Where to Look
The Beginning is a Very Good Place to Start
When we begin our research, we start with a basic proposition. Is he or she a real person or if it’s a business we are looking at, is it a real business. The people problem, we’ll leave for some other day. Let’s look at verifying a business identity. Now, there’s really two questions here, does a business exist and does it do business. We’ll also leave the, does a business do business, to another day. We know that’s usually the more important question, but we want to start with the basics. And the way to start is to understand how a business can be formed/the types of businesses that exist in the US (leaving types of business outside the US for yet another future post). There are five types of basic business formations in the US, with various doo-dads along the way.
Types of US Businesses
Sole Proprietorship
General Partnership
Limited Partnership (LP)
Limited Liability Company (LLC)
Corporation (Inc. or Ltd)
Before diving into the differences and such; let’s point out that there are other forms and forms within forms. So for instance there are S and B and C corporations and limited liability partnerships and professional service corporations. For the purpose of this post, and the purpose of this post is to understand where to look, ignore everything but corporation or partnership if that’s in the title.
Why Did They Do That Form
When starting a business, an individual chooses from those five types of business forms—actually a person can only choose one form, partnership, if he or she has a partner. There are reasons to choose any of the forms. They revolve around three things: cost, amount of work/complexity, and asset protection (i.e., shielding personal assets from business assets). So on one hand, a sole proprietorship is the easiest to set up and pursue, it affords zero asset protection. At the other end, corporations provide the most asset protection with the greatest costs and work; corporations require their own tax identification number and tax returns. To maintain the separation of corporate assets from personal assets, one must “maintain the corporation”, that is by completing certain paperwork and maintaining proper records. We’re not going to tell you which to pick and why. There are plenty of resources. This one is simple and useful. What we want you to understand is that the form someone else picks impacts how you can verify it.
It’s not Always Where You Think to Look
You may think that the way to verify a business is to go the the State’s Secretary of State. You would be right. Secretary’s of State have registries of businesses for their state. Except not all business forms register. A Secretary of State search may not find your business.
Which Businesses Register with the Secretary of State
Your Secretary of State search will find businesses set up as corporations and limited liability companies.
In some states it may find limited partnerships
In some states in may find partnerships and sole proprietorships
Finding Partnerships and Sole Proprietorships
If you want the name of your business anything other than your actual name, you will need, depending on the state, an “assumed name”, a “d/b/a”, or a “fictitious business name.” And depending on the state, this record will be filed at the county level or the state level. A business may exist, but if you do not check the right assumed name registry, you will not find it.
Remember partnerships, including law firms and other professional service firms (to the extent they are still partnerships these days) almost always operate as fictitious names. Neither Sidley or Austin is around anymore.
Partnerships set up to own real estate often file their partnership agreements or related documents at the County Recorder where the partnership owns property.
Summing Up
Generally, finding a business; checking off if it exists, is not a tough task. All states have easily accessible Secretary of State websites. Even Delaware, which otherwise does not make much information available online, will verify your company name when you go to their website. Still, you cannot find every company at a Secretary of State website because not every company is a corporation or limited liability company. It helps to understand the differences in business type when you research. It may matter in lots of ways in understanding a company. It will especially matter when you go to find a company.