South San Francisco, CA October 21, 2022 from Better Business Bureau
Starting a new business?
Watch out for letters that look official – but aren’t
Correctly filing the official paperwork can be a nerve-wracking part of setting up a new business. New business owners can easily confuse official-looking correspondence with a real legal requirement. Here’s how to spot a con that tricks new business owners into overpaying for an unnecessary Certificate of Existence.
How this scam works
Don’t fall for it! The letter may state in fine print that the certificate is “optional,” but overall, the tone suggests it’s a legal requirement. It’s not. Businesses may wish to obtain a Certificate of Existence in certain circumstances, such as a loan closing. However, it’s not a required part of setting up a new company, as the correspondence implies. If you do need a Certificate of Existence, visit your state’s website and purchase one directly. States charge about $10 for this service.
See the full BBB Scam Alert for an example of this scam
How to spot this scam:
- Get familiar with the state laws that apply to your business. Check your state’s government website to find out what business certificates and licenses are required by law, if any.
- Know that new business owners are targets for scams. Stay alert to the possibility of being targeted by a scammer. Don’t take everyone at their word and be wary of unsolicited communications. Do research before paying for any services or certificates that anyone claims you need in order to do business.
- Review payment notices carefully. Scammers sometimes send fake invoices hoping you’ll assume they are legitimate and pay without thinking. Never pay without confirming an invoice is real.
- Read more tips. See the full BBB Scam Alert for more advice.
For more information
Read about a similar labor law poster scam. Learn more about choosing the right structure for your new business and understanding tax requirements. Protect your business and improve your skills as a business owner by reviewing the latest content at the BBB Business Headquarters.
If you’ve been the victim of a scam, report it to BBB Scam Tracker. By reporting your experience, you can help others avoid falling for the same scam.
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