How to check the reliability of a business partner?

Any developing business needs business partners. However, finding reliable and honest partners is not easy, so to protect yourself and your business from fraudsters and one-day companies, you need to check in advance who you will work with. Read the article to learn how to check business partners.

Why check a business partner?

Here are some reasons why you need to check business partners:

• The company you are working with does not exist. The counterparty with whom you intend to cooperate has created a website, made a seal, sent a price list, but forgot to register as a sole proprietor or LLC. Cooperation with such a counterparty may be regarded by the inspection authorities as fraud (on your part), and this, in turn, is considered a criminal offense.
• The business partner is bankrupt. Your chances of getting your money back are not high, as your counterparty must go through bankruptcy proceedings, and you must register with the register of creditors and wait for your turn to come. But it may turn out that by the time your turn comes, there will be no money left.
• Your counterparty simply has no money and will not be able to pay you. The company may be perfectly legitimate, but it doesn't even have the money to pay taxes, and naturally, it won't have anything to pay you either.
• Your future partner may turn out to be a one-day company.
• The counterparty may be a defendant in a lawsuit or a participant in fictitious schemes.

How to check a business partner?

To check counterparties, there are free government websites that contain information from open databases and paid services.

Free sites for checking counterparties:

1. The Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations. This is the most famous and easy-to-use service for checking counterparties. You can find out information about the founders and owners, authorized capital, types of activities, see the date of registration and address, and find out whether the counterparty is undergoing liquidation. To obtain the information, it is enough to know the full name (for individual entrepreneurs), company name or EDRPOU code. The only disadvantage of this register is that the information in the register is updated with a delay of several days.
2. Electronic taxpayer account. This is another easy-to-use and quite effective tool for checking counterparties. On this site, you can check the counterparty and find out when it was registered with the tax authorities, whether it is a single tax payer, what group it is in and what types of activities it is engaged in, whether it has licenses to sell excisable goods, whether it is a VAT payer, receives government subsidies, and much more. To obtain information, it is enough to know the name of the counterparty, as well as the EDRPOU code.
3. The website of the tax office. The tax website has a section on checking business partners. You can find out whether your counterparty has a tax debt and whether it is registered with the tax authorities. It is better to check using the EDRPOU code, as the service cannot provide information on several sole proprietorships or companies at the same time if the names are similar.
4. The Unified State Register of Court Decisions. This registry is more suitable for checking legal entities than individual entrepreneurs, as information about individuals is encrypted. In the register, you can see all cases that are open and closed and read court decisions. The information in the register is updated slowly and with a delay of one week
5. Judiciary of Ukraine. The register is similar to the previous one, but here you can see information on individuals. On the downside, if the case is closed, there will be no information, the register contains information on cases that are still open.
6. Clarity Project. It is a tool created by volunteers to monitor the Prozorro public procurement database.
7. Опендатабот. This service works through the Telegram, Facebook Messenger, Viber, and Skype mobile applications. With the help of this registry, you can check an individual, a sole proprietor, and a legal entity. Information is pulled from many sources: Ministry of Justice, Court Register, Ministry of Internal Affairs, etc. If you need to check a couple of counterparties, you can do it for free, but if you want to monitor information about partners on a regular basis, you will have to buy a subscription.
8. Google. After checking the counterparty in open registers, don't forget to google it, because negative reviews are not written in state registers.

Paid sites for checking counterparties:

1. Contragent. This is a service from LIGA: ZAKON. With the help of the service, you can check the counterparty in open databases, sanctions lists, obtain data on foreign economic activity, etc.
2. YouControl. This service checks 50 registers and provides a summary of the counterparty. You can find out general information, financial status, issued licenses, etc. The cost is from 680 UAH/day.