Distinguishing legitimate companies from dubious ones has become a very tricky task.
As a lawyer I've reviewed thousands of business deals, companies, and employees. Your discerning eye and attention to detail can be invaluable in this pursuit. This guide equips you with a comprehensive checklist to help determine a company's authenticity, from basic red flags to in-depth investigations.
Custom Domain Name:
- A custom domain (e.g., email@companyname.com) lends an air of professionalism and authenticity. Be cautious of companies using emails from personal accounts and companies that lack
Business Registration:
- Verify the company's legal status by checking its registration with relevant government authorities, this is usually the Secretary of State website for whatever state the business is registered in. Legitimate companies are duly registered and compliant with local regulations, and if a company doesn't have this registration this is a red flag.
References and Reviews:
- Seek references from clients or industry peers who have worked with the company. Online reviews on platforms like Google, Yelp, and industry-specific forums can also provide valuable insights.
BBB Accreditation:
- The Better Business Bureau (BBB) is a reputable resource for assessing a company's credibility. Check for accreditation, ratings, and any reported complaints. BBB accreditation is not mandatory for business, so the lack of BBB accreditation isn't a red flag for businesses, but if a business is registered this provided an extra layer of authenticity.
Dun & Bradstreet Information:
- D&B reports offer comprehensive business data, including financials, creditworthiness, and operational details. Accessing this information can provide a more comprehensive view of the company's legitimacy. If the business you are working with is a corporation, it likely has a Dun & Bradstreet number. You should request this number or simply look up the business in the database.
Employer Identification Number (EIN):
- The EIN, issued by the IRS, is a unique identifier for businesses. Requesting this number can help verify a company's official status.
Website Examination:
- Scrutinize the company's website for professionalism, completeness, and accuracy. Look for clear contact information, check for how recent updates have been made, and check the contact information that is listed. Frequent updates are a sign of a healthy business.
Social Media Presence:
- Active and well-maintained social media profiles are indicative of a legitimate company. Beware of sparse, unprofessional, or nonexistent social media activity. Social media inactivity is not a dealbreaker, but if you see contradicting information or cannot find social media this could be a red flag to pay attention to.
LinkedIn and Employee Profiles:
- Explore the company's LinkedIn page for information on its team, including executive profiles. Legitimate companies have established professionals associated with them. Linked will have valuable information about a business, and many post updates to their profile, this is a great place to help with your diligence.
General Google Search:
- Look up the company and contacts on google. This is a very simple way to get recent activity and 3rd party information. Conduct a broad internet search using the company's name along with keywords like "scam," "complaints," or "fraud." This can uncover any negative reports or red flags associated with the company.
Crunchbase Profile:
- Crunchbase is a valuable resource for gaining insights into a company's funding, leadership, and growth trajectory. Established companies are more likely to have a detailed Crunchbase profile. This is another reference point, especially for startups and tech companies that may not be visible on local databases or social media.
Industry-Specific Certifications:
- Depending on the industry, specific certifications or memberships may be indicative of legitimacy. For example, lawyers must be members of a bar association, and licensed professionals will typically have a governing agency where members must be registered and maintain licenses and competency. Use these to help verify that professionals are who they are claiming to be.
Employing these measures will help you navigate the increasingly complex landscape of company vetting and keep you safe from scams and bad business deals.
By leveraging your legal acumen and paying attention to these crucial indicators, you can confidently discern the legitimate from the questionable. Remember, diligence in due process is the cornerstone of ensuring your clients are engaging with reputable entities.
For best practice, always have your lawyer review for you.
