How Businesses in 2021 Reduce the Risk of Tax Fraud

Startups are created daily. And the one thing that every business has in common is the need to file and report taxes accurately. Businesses that fail to do this can be accused and convicted of tax fraud and it can destroy everything you’ve built. The great thing is that businesses can reduce their risk. It starts with having proper systems in place and in hiring people to work for you who can be trusted.

Small businesses and startups who have good hiring practices are more likely to avoid tax fraud and continue creating products and services that customers love. Some of the best businesses in 2021 will do the following to ensure they hire the best people and leave little room for fraud in their business.

Track Important Tax Deadlines

The first thing you need to do is to learn when important tax deadlines are for your business. They vary from state to state and here’s a tip: they are not the same as personal tax deadlines. Businesses have payroll taxes and more to look after and with all the moving parts in a business, it’s important to have a dedicated person handle these important tasks. Many startups forget the importance of a good bookkeeper or accountant when they are choosing their developers and U/X designers. It’s vital to create a plan for tracking these deadlines

Another option is to outsource tax-related tasks to an accounting firm to be sure the work gets done. You’ll want to choose a reputable company known for meeting deadlines.

Run Regular Background Checks

Another important way to reduce the risk of tax fraud in your startup is to perform background checks. While they can tell if someone has committed a violent crime, they can also show whether a potential employee committed other crimes like petty theft or tax fraud. You don’t want people who’ve already been convicted of these things to work for your business if you want to ensure the highest level of integrity. Background checks show you which employees are squeaky clean and which ones might be a little messy. Just because someone has something show up in a background check does not automatically disqualify them, but it does present a red flag you should consider in the hiring process.

In addition to background checks at hiring, some companies run them periodically as well. This is to ensure that someone hasn’t committed a crime that should disqualify them from continued employment at your company. Employee background checks are a critical part of your business success.

Run Credit Reports

Credit Reports tell a lot about a person. Employer credit reports can’t tell the credit score, but it can see what the balances are, where they are from, how much the limits are. This can give you an idea of whether or not your employee is a shopaholic with 100 maxed out cards, or a person who pays off their balances every month. While it’s okay to get into a financial struggle on occasion, a person with a track record of poor money habits will be a huge risk for tax fraud.

Secure Servers

Want to reduce the risk of fraud? Make your employees log in to secure server networks to do their work. You’ll be able to track what they do better than if you don’t require them to log in to work. Additionally, make sure that more than one person has access to any given area. A place where only one person can gain access is a risk factor for fraud. This is especially true for people with access to money and budgetary parts of your business. Secure servers also mean that only the people you want to get access to certain areas can. You don’t want someone able to mess with computer code who has no qualifications or credentials to do it.

Reducing the risk of tax fraud is possible in 2021. It starts with the hiring process, and it’s important for startups to consider how they will find and hire new employees. Whether you hire remote employees or on site staff, it’s critical to find trustworthy and reliable people. Simply running credit reports, background checks, and providing secure access to work spaces help to mitigate instances where fraud can happen. 

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