How to verify a business before you pay it

Short answer: confirm the company exists and is current in its home state, match its legal name and EIN to your paperwork, then check liens, lawsuits and the sanctions list. All of it can be done for free from official sources in about twenty minutes.

Paid background-check sites sell the same public records, re-packaged and sometimes months out of date. The checks below go straight to the agencies that keep the records, so what you see is current and you can cite it if something goes wrong later.

The ten checks, in order

Check	What to look for	Cost	Where
State registration	Search the state where the company says it was formed. Confirm the exact legal name, status and formation date.	Free	State business search (see our state guides)
Standing	Active is not enough in some states. Look for a separate tax or standing field, or order a certificate.	Free to about $50	State record or certificate of good standing
Name on paperwork	Compare the legal name on the record with the contract, invoice and bank account name, character by character.	Free	Your documents
EIN	Ask for a signed Form W-9. Check the number format and prefix; nonprofits can be matched in IRS records.	Free	Form W-9, our EIN checker, IRS exempt search
Licenses	Contractors, lenders, insurers and many trades need a state license that is separate from the business record.	Free	State licensing board lookup
Liens	UCC filings show lenders with claims on the company's assets. Several recent filings can mean cash strain.	Free in most states	Secretary of State UCC search
Lawsuits	Federal cases and bankruptcies are searchable nationally; state court searches vary by county.	Free to $0.10 per page	CourtListener, PACER, county court sites
Sanctions	U.S. persons may not deal with parties on the OFAC sanctions list.	Free	OFAC Sanctions List Search
Investments	Anyone raising money may have filed with the SEC; brokers must be registered.	Free	SEC EDGAR, FINRA BrokerCheck
Complaints	Look for patterns, not single complaints. Attorneys general publish actions against businesses.	Free	State attorney general, FTC

Start with the state record, because everything else depends on having the exact legal name. If you do not know which state the company was formed in, the nationwide search guide shows how to find it. For the EIN step, our EIN checker confirms the format and IRS prefix, and the UCC lien search guide covers the lien step state by state.

Red flags in the public record

Warning sign	Where you see it
Formed weeks ago but claims years of experience	The formation date on the state record
Status is delinquent, forfeited, revoked or dissolved	Status and standing fields
Registered agent resigned and no new agent appointed	Filing history
Legal name differs from the name on the invoice or bank account	Record vs. your documents
Formed in one state but operating in another with no foreign registration	Search both states
Dozens of companies share the same agent and street address	Agent search, where the state offers it
No recurring report filed for several years	Last report filed
Several new UCC liens in a short period	UCC search
Refuses to provide a W-9 or the EIN changes between documents	Your documents

One flag on its own is often innocent. A new company really is new, and an agent can resign for ordinary reasons. Two or three together, especially a recent formation, a name mismatch and a refusal to send a W-9, are a reason to stop and ask questions. A lapsed status is explained under good standing.

What official records cannot tell you

Who owns most LLCs. Many states never collect members. The LLC lookup guide lists the states that do and legal ways to learn more.
Whether the company can pay. Private companies do not file financial statements with the state.
Whether a person is trustworthy. State records describe the company, not the character of the people behind it.

How to look up a business license

There is no national business license search, and a business entity verification is not a license check. Regulated trades such as contractors, lenders and insurers hold licenses from a state board, each with its own lookup. General business licenses usually come from the city or county. A few states issue a general state license as well: Alaska, Delaware, Nevada and Washington, where the license and the entity record use the same UBI number.

Official records vs. paid background-check sites

	Official sources	Paid lookup sites
Cost	Free, with small fees for certificates	Subscription or per report
Freshness	Current as of the last filing	Depends on when the site last copied the data
Usable as proof	Yes, certificates are official	No; most say they do not verify accuracy
Legal limits	Public records	Most are not consumer reporting agencies and cannot be used for credit, hiring or housing decisions under the FCRA

Business verification questions

How do I verify that a business is legitimate?

Confirm its registration and status in the state business search, compare the legal name with your paperwork, check its EIN on a W-9, and search liens, lawsuits and licenses. The ten checks above run in that order.

Can I check a business registration for free?

Yes. Every state search is free, as are UCC searches in most states, federal court indexes on CourtListener, the OFAC sanctions list and SEC filings.

Does an active status mean a business is trustworthy?

No. It means the company is on file and current with the state. It says nothing about finances, quality of work or the people behind it.

How do I look up a contractor's license?

Use the licensing board lookup in the state where the work is done. Contractor licenses are separate from the business entity record and are issued by a different agency.

Sources

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