As you navigate the business world, you will often need to show proof that you own your business. Proof of ownership demonstrates that your business is a legitimate entity and that you are the legal owner of the business. This proof may come in the form of your business’ Articles of Incorporation (or Articles of Organization, as applicable) or business license. You may need these documents to open a bank account, buy a business asset, form a partnership, engage with investors, or participate in a legal matter.
The Articles of Incorporation (used for Corporations) or Articles of Organization (used for LLCs) (hereinafter collectively, “Articles of Incorporation”) are official documents that provide information on business ownership. The Articles of Incorporation is the legal document that creates your business as a legal entity (either corporation or LLC) in the eyes of the state. This document is filed with your state’s Secretary of State. The Articles of Incorporation typically include the following information:
The process for obtaining a copy of your company's Articles of Incorporation varies by state. However, you can follow these general steps:
An operating agreement governs the internal operations of a limited liability company (LLC). It outlines the membership, management, and operations of a LLC. An operating agreement, like the Articles of Incorporation or Articles of Organization, identifies the LLC members and their ownership percentages. For LLCs, this document is essential for many reasons, such as;
To draft an operating agreement, use this template offered by the SBA's Score program or any other acceptable template. However, if you need help drafting an operating agreement, you should consult with an attorney.
A share certificate is a signed document from a corporation and is legal proof of ownership of a specified number of shares. A corporation’s board of directors must approve share certificates before they are issued. Once approved, a shareholder will receive a receipt. It will show the shareholder’s purchase of shares, thereby showing ownership in the business.
A partnership agreement, like an operating agreement, outlines the partnership's management and operation. However, your partnership agreement may be filed some place other than the state, or not at all, depending on your jurisdiction. In Delaware, you don't need to register your general partnership with the Secretary of State before doing business. However, California requires limited liability partnerships to be filed with the Secretary of State.
Most states require a "Doing Business As" (DBA) filing if a partnership uses a name different from the partners' names. Depending on jurisdiction, this must be filed with the Secretary of State or the County in which the business is based.
A business license is a state-issued document. It allows the owner(s) to conduct business within the state. The document is issued directly to the business owner(s). Therefore, it proves ownership. You must check with your state and county to determine whether you need a business license for your company because the rules vary by jurisdiction.
An Employer Identification Number (EIN) is a unique nine-digit number the Internal Revenue Service (IRS) assigns to businesses in the United States for tax purposes. This is also known as a Tax Identification Number. This number is issued to business owners on form CP 575. You can apply for one here if you have yet to obtain an EIN for your business.
The steps to register your business vary by state and entity type. However, in general, you will need to:
Once you have registered your business, it is essential to keep all records for as long as you own and operate it.
Registering your business can be a rather challenging experience. If you need help, you should always consult a competent advisor. Working with an accountant or attorney is ideal. Either party can not only help you register your business but also help you determine which entity classification is best for you and make sure you address any matters particular to the management of your specific business.
Opening a business account for your company is one of several reasons you need to keep your proof of ownership on hand. If you open a bank account for your company, you’ll need any one of the following documents:
You must show proof of ownership to obtain a business loan when opening a business account. Showing evidence of ownership during the loan process shows the bank has the legal right to make decisions on behalf of the business. So, just like with a bank account, you will need:
When you enter into a contract on behalf of your business, showing proof of ownership helps to ensure that the contractual agreements are valid and enforceable. If you plan on entering into a contract on behalf of your business, you should present proof of ownership to show you have the legal authority to enter into the contract.
If you misplace your business ownership documents, contact your Secretary of State where you registered your business or the IRS if you need an EIN letter. You can contact the IRS’s Business & Specialty Tax Line at 1-800-829-4933 to request the replacement.
If, for any reason, you need to revise your proof of ownership document, the process depends on the type of business document and the jurisdiction in which your business is located. You will typically need to file Articles of Amendment or a Certificate of Amendment to update your business filings or sometimes the update can be taken care of if your state has any sort of annual filing requirement.
It is important to maintain accurate, up-to-date proof of business ownership documents. These documents are important for banking, loan applications, and contracts and are essential for your business's day-to-day functionality. To ensure your business remains in optimal condition, regularly update and safeguard your proof of ownership documents.
To prove you are the owner of a business, you can present proof of ownership documents, such as: (1)the articles of organization or articles of incorporation, (2) the EIN Letter (CP 575), or (3) the company’s operating agreement or partnership agreement.