The Internal Revenue Service reported in 2017 that business identity theft increased 250 percent. Simply put, your client’s identity gets stolen, they are out of business. So what can you do?
It is critical that the accounting professionals who are trusted advisors to their clients pay attention to this major issue and assist them with a method to prevent or minimize the risk of this happening.
Small businesses are the largest target for many reasons, but mostly because they are doing their best just to run their business, get the work done and attempt to get 5 hours of sleep a night! Unfortunately, the lack of knowledge of ID theft causes those smaller businesses to be defrauded.
According to the Business Identity Theft 101 guide , some of the things that a fraudster does with a business’s identity are opening business credit cards, creating false tax returns that result in refunds, take out a loan in the name of the business and more. It is actually pretty easy to steal a business’s identity if you have access to some simple information including EIN, bank account information, and state registration information (which is public by the way).
So who would do such a thing? I can tell you that this epidemic is on the rise and moving quicker than most can keep up with.
The worst part about it is that at the end of the day, the business owner is still responsible for debts including payroll tax, sales tax, credit card debt and any other debts caused by the fraudster. It is extremely important that we are aware that we want to trust people, but that also requires that we verify that business financial management is being handled properly.
One of the scariest things about identity theft is that you may never find out who committed the crime. Often we see something on the news or on the Internet about a small business being defrauded. It is rare that a small business owner gives any attention to those stories as they believe that will “never happen to me.”
Since business identity theft is on the rise, I think it is important for the accounting community to step up and take action. The small business community needs their trusted advisors to stay up on the latest developments in this key area of fraud.
For more information on how you can stay on top of small business identity theft, visit QuickBooks Detect & Defend powered by EZShield where you can find timely resources including articles and guides on how you can help your small business clients defend themselves against the threat of business identity theft.
Dawn is a Certified Public Accountant, Certified Fraud Examiner, and CEO of Powerful Accounting, LLC. Powerful Accounting is a nationally recognized accounting, tax, forensic and fraud, IRS and State Agency audit professionals as well as a QuickBooks consulting firm. Recently, Powerful Accounting has partnered with Anderson, Brolin & Coba...