Steps To Proof A Business To Get A Start-up Loan!

Posted by finway on April 14th, 2021

Opening a bank account in the company's name is one of the most common reasons for requiring evidence of business ownership and a requirement of a loan to start a new business. Many banks demand that the individual opening the account be identified as the business's owner and the owner of the company's legal documents.

The issue is that the articles of incorporation are often written not to identify the business's owner. The organizer is the person who files the documents in both LLC and company documents. The organizer does not always show the company owner. The organizer may be a company employee, a partner, or even the attorney who files the paperwork on the company's behalf.

Ownership of a Sole Proprietorship Must Be Shown

A sole proprietor is a person who owns and operates a company on their own. They haven't isolated the business's tax and legal obligations from the owner's. The company likely operates under a different name than the individual, a practice known as doing business (DBA).

The following documents may be used to prove sole proprietorship ownership:

• A copy of the owner's tax return, including Schedule C.
• A copy of the DBA demonstrating that the individual created the alternate business name.

Proof of Corporate Ownership

There are two different forms of company ownership, which impact the form of proof needed.

A sole proprietorship and an S Corporation are somewhat similar. To assert the gains and losses of the company, the owner uses their tax ID number. The following records can be used to show ownership of an S corporation:

• A copy of their individual income tax returns
• The articles of incorporation complete with stock details.

Proof of Limited Liability Company Ownership

Corporations and associations are similar to limited liability companies. LLC owners may use their tax ID numbers, but they have formed a structured company to limit their liability. An EIN can also be used by an LLC business owner for tax purposes.

Share Ledgers and Stock Certificates

Stock certificates and share ledgers are often used to establish ownership of a company. Stock certificates are widespread in larger companies, but they are not often available in smaller businesses. This can make proving ownership in companies related to the stock licenses difficult, particularly for minority shareholders.

Stock certificates, on the other hand, are not always representative of company ownership. They are just a tiny part of the evidence of company ownership.

Without Certificates, Proving Business Ownership

While it is immoral and illegal to refuse a corporation's ownership, it does happen. Without the licenses, proving ownership of a company can be challenging. Where no business certificates are available, the claimant must demonstrate that a contractual agreement took place.

Conclusion

To show that a sole proprietor owns a company, proof of business ownership is often needed when you need funding for a small business startup. Using company records and tax forms, there are a few ways to show business ownership. There are a few other reasons why a person would need evidence of business ownership.