How to Find Out Who Owns a Business [Guide]

Regardless of why you want to know who owns a business, it’s simply just one thing that matters, and it’s deconstructing the entity’s true ownership structure. Some business structures are complex, as they are intentionally not intended to disclose all the people behind the company. While this can be treated as a red flag shouting loudly “fraud,” it’s not entirely true or always the case. Finding out about a company is vital when it comes to B2B relationships. It can also be a good call when doing market research when thinking about a potential partnership or investment.

So, whether you’re doing standard market research, conducting due diligence on another entity for legal compliance reasons, such as Know Your Business (KYB) requirements, or just curious to find out who are the members that are responsible for a certain firm’s success, there are some vital pinpoints that you don’t want to miss when looking up the business. For example, structures can be confusing: LLC owners are called “members,” while those managing daily operations are “managers.” While public business registries can be useful, some jurisdictions lack them, and certain company structures require more in-depth research.

So, what’s the best strategy to do it right and assess the company? We’ve outlined the key steps that will help you determine whether a business is legitimate or not.

Why is Finding Out Who Owns a Business Important?

Learning about a company is the first step to making better business decisions. It helps decide whether the entity that you’re reviewing is trustworthy and a good fit to be in a business relationship. For example, this is important because sanctions compliance constantly changes, and due to today’s geopolitical environment, it’s important to strictly screen sanctions databases, ensuring that the company and its related persons aren’t sanctioned, as required by Anti-Money Laundering (AML) compliance laws.

Beyond mandatory regulations, company background checks help ensure transparency and prevent illegal transactions, detecting risks and concrete factors that need to be considered, especially within complex corporate structures. For example, small local businesses often have rather clear ownership histories. However, the same can’t be applied to larger companies or limited liability companies (LLCs), where owners (known as members) can be harder to identify. There are also exceptions where a business can appoint a non-owner to manage its daily operations. In this case, the actual owners then have other roles, such as the company’s chief technology officer (CTO).

How Does KYB Help Check Another Company’s Legitimacy?

KYB, or Know Your Business verification, is a special regulatory requirement that obligates companies like banks and other high-risk regulated businesses to review and identify other companies before starting to work with them. This includes all partners and third-party vendors as part of AML requirements to prevent fraud and money laundering. Since ID verification checks or Know Your Customer (KYC) have been longer than KYB requirements before they were implemented, criminals used this loophole for crime, which now is solved with more stringent checks not only on individual identity but whole business structures.

KYB checks help determine another company’s legitimacy because this process involves multiple steps designed to find out who owns the business. It involves collecting key business information, including the company’s name, address, identification documents, business licenses, and financial/transactional history data. This information helps verify the whole business’s identity and assess its risk profile or related AML risks. KYB also requires verifying all directors, owners and other important individuals that complete the company’s ownership structure, such as the Ultimate Beneficial Owners (UBOs).

Examples of Why Companies Need to Review the Company’s Ownership Structure

There are certain cases where finding out who owns a business is crucial, mainly because companies want to:

Assess opaque corporate structures. Businesses intentionally hide their tracks behind the lack of transparency in their corporate structure. In the context of financial crime and reporting, this helps them stay undetected, especially if no professional tools or skills are used to verify hierarchies like “nominee directors” or “bearer shareholders.”
Identify high-risk individuals. Here, the first step is to verify that all related persons to the company are real, they use legitimate documents and their personal details match their transaction records. Then, all the people and business owners need to be screened against AML databases as a way to determine high-risk customers and apply enhanced due diligence (EDD) measures or determine if they want to work with such companies and individuals at all. This is to avoid illegal transactions or working with individuals who appear on criminal watchlists.

To skip and not check another company’s background info means that you’re risking getting involved with shady individuals who can expose your business to fraud, even if you don’t intend to do that.

For example, while shell companies themselves aren’t illegal or fraudulent, some criminals use this structure with no actual business operations to launder funds, typically using a jurisdiction that has regulatory loopholes. That’s why screening is stricter for high-risk areas and companies that operate there. Any business that has money flow and conducts financial transactions needs to find out everything about its partners to avoid operational and reputational risks.

What are the Main Business Ownership Types?

To better understand who owns a business, it’s vital to know the key types of ownership structures, as they differ, making the assessment a custom process.

Each structure has its own characteristics that need to be reviewed:

Sole Proprietorships

Sole proprietorships are considered to be the entry-level form of a business structure. A sole prop means that a single individual is responsible for the business. From a legal perspective, there’s no separate distinction between them, aka the owner and the business. That means that typically one person has full control of the business and is responsible for all its risks (for example, if the business is failing or they need to purchase supplies to fund their operations).

In general, sole proprietorships can be owned by an individual, a company, or a limited liability partnership. Sole props are very common in the US because they offer several benefits, such as eligibility for tax deductions and a straightforward tax filing process using a Social Security Number (SSN) (there’s no need for an Employer Identification Number (EIN)).

Limited Liability Companies (LLCs)

Limited liability companies (LLCs) are state-formed legal entities that can have one (single-member LLC) or multiple owners (multi-member LLC). This means that its members are not personally liable for the company’s debts and obligations. In other words, its financial losses are limited to the amount invested in it. LLCs have a combination of features of sole proprietorships and corporations.

LLCs can have one or multiple owners, known as members. Some members are responsible for their daily operations themselves, while others have managers who run the business on their behalf. The most complex part is that titles like owner or manager in an LLC don’t clearly reflect that person’s exact role in the company. Instead of the term “member” in an LLC, people use common names like Chief Executive Officer (CEO), Chief Financial Officer (CFO), and so on.

Unlike sole proprietorships, LLCs provide a crucial layer of protection by separating personal liability from business debts and lawsuits, making them a popular choice for business owners looking to safeguard their personal assets. However, many start out with sole proprietorship and then later transition into an LLC after scaling. LLCs offer flexibility in choosing a tax structure, allowing owners to optimize tax savings.

Partnerships

Partnerships are considered a business structure where two or more individuals (as well as corporations or businesses) have shared responsibilities and liabilities. In other words, they share ownership and profits, as outlined in their partnership agreement. There are different types of partnerships.

Partnership agreements need to list ownership details, which are often accessible through public records. For example, in a general partnership, all partners equally share profits and liabilities, pooling resources and sharing workloads. While general partners actively work in the business, limited partners often are responsible for providing capital.

Apart from general partnerships, other types include:

Limited partnerships (LPs). They have at least one general partner (who has unlimited liability) and one or more limited partners (who have limited liability). Limited partners have minimal involvement in the entity’s management.
Limited liability partnerships (LLPs). In this business structure, all partners have limited liability, meaning that each partner has limited personal liability for the entity’s debts or claims.

Corporations

Corporations are separate independent legal entities that are owned by shareholders. They typically receive one vote per share. In general, the corporation’s board oversees senior management, executes the business strategy, etc. Shareholders are not personally liable for the company’s debts. There are tax laws that also impose personal liabilities on board members. In general, the corporation’s directors are responsible for taking care of corporate debts.

Large companies like Apple typically operate as corporations. There are different types, such as:

C-corporations. These are businesses that are often chosen for tax benefits that operate using an elected board of directors. They are chosen by the entity’s shareholders who are subject to corporate taxes.
S-corporations. These corporations pass income, losses or credits to shareholders for tax purposes. However, s-corps have more restrictions compared to c-corps. They are limited to 75 shareholders.

That’s why corporations provide strong liability protection but sometimes have complex ownership structures. You can access details about a corporation through state business registries.

Where Can You Find Information About Business Ownership?

There are several detailed databases and important resources where you can look up information about a business. For example, names linked to a certain company’s ownership structure are often listed in government registries, which are available online.

Alternatives where you can find information about a certain company include sources like:

1. Local Government Records

It depends on your internal risk assessment and varying business data collection requirements, however, most of the time all jurisdictions are important when it comes to your operating markets. Local government offices can also provide valuable insights about a company, especially for locally operated entities and smaller enterprises. For example, you can request documents from the county clerk’s office and review them for representative names and titles that reveal the company’s ownership structure.

2. Public State-Level Resources

There is an option to request company data, such as info for the owners of an LLC, via a public records request (which can usually be submitted electronically or by mail). Since businesses need to register with the Secretary of State’s office, they also hold online business registration records that can be accessed publicly, sometimes for a fee. You can use the business entity search tool and enter the company’s name, as well as visit the official state government website.

Alternatively, you can visit a local office in the city where the entity operates. However, this is a more time-consuming option. Most businesses, including corporations, partnerships, LLCs, etc., must register with the state before operating. That’s why this is considered a reliable way to look into a company’s ownership structure.

3. Federal Databases

This includes publicly accessible databases, such as the Dynamic Small Business Search (DSB). Another database and an important source is the SEC’s EDGAR system, or the Securities and Exchange Commission’s Electronic Data Gathering, Analysis, and Retrieval system. It serves as the primary real-time resource for corporate filings in the US, processing around 40,000 new filings each year. It includes all sorts of data, including important details like EIN numbers. You can search the entity by its company name, associated individuals, or keywords.

While EDGAR provides federal-level filings, you can also access state-level data using the country code format. Keep in mind that some federal databases only contain information on publicly traded companies.

4. Third-Party KYB Solutions

This is a reliable way to check who owns a business and review other information about an entity in one place. However, third-party KYB solutions are from the private sector, costing money. Bigger companies who juggle multiple clients and providers, including those who are strictly regulated, choose automated solutions over manual methods because they save hours, if not days, in labour and time on assessing various documents.

Integrating a third-party KYB solution allows you to access a unified dashboard that automatically connects to government databases and private resources. This allows you to cross-reference company ownership details, including other important factors, such as the company’s address, EIN, and associated individuals (directors, UBOs, etc.), making it easier to identify the actual owners and their share percentages.

iDenfy’s KYB solution can help you:

Instantly connect to 180+ company registries from more than 120 countries for original, real-time database information required for compliance.
Conduct a company address audit to check whether the company address exists and understand potential risks.
Perform AML checks and include companies and individuals in ongoing AML compliance monitoring.
Conduct risk assessments in the same dashboard, determining high-risk clients linked to that particular company.
Create KYC verification sessions after receiving all shareholders from company reports.

Want to learn more about efficient methods that help you find out who actually owns a business? Let’s talk about different types of business structures, database options and how to make business verification onboarding more efficient.