By Karen Axelton
Is your small business at risk of identity theft or credit card fraud from improper use of business and personal credit cards? A recent report from Javelin Strategy & Research, 2012 Identity Fraud for Small Business Owners, reported by Fox Business, has some alarming news. Here’s some of what Javelin found, and what it means to your business’s security.
First, small business owners are more likely to be affected by fraud (8.8 percent) than are non-business owners (4.7 percent). What are some of the reasons?
Failure to separate business and personal accounts. More than 50 percent of entrepreneur surveyed admitted they use personal credit cards or bank accounts for business transactions and expenses. In fact, 38 percent don’t even have separate business accounts—they use their personal accounts for everything.
Failure to review charges and expenses. Just 38 percent of small business owners in the survey say they review their business transactions, such as credit card and bank statements, every month.
Failure to take security precautions. Just 5 percent of small business owners regularly do background checks on job candidates.
What are some steps you can take to prevent being a victim of fraud?
Always separate business and personal accounts. Mingling your accounts not only puts you at risk of identity theft, but could also lead to problems with the IRS if you or your business are ever audited. Always set up a separate business bank account and business credit cards.
Conduct background checks. You should do checks on all potential hires, but it’s especially for anyone who will have access to your business’s bank accounts, will be handling finances or will be using company credit cards or expense accounts.
Monitor expenses. No matter how busy you are, take time to review your business’s charges and expenses personally every month. This way, you’ll be able to notice any suspicious or unusual activity before it gets out of hand.
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