What You and Your Business Can Do to Avoid Identity Theft This Tax Season

Identify theft is a topic and headline that has attracted many headlines over the past few years, with individuals, large corporations, and government organizations falling victim to identify theft and data breaches. Identity theft and data breaches are always a risk, but can be even more prevalent during tax season, when information is at a premium, and business owners are already under extra pressure.

A study conducted by IBM identifies the average cost of a data breach at $3.62 million, and while this figure will obviously vary from organization to organization, the implication is clear. Data breaches and identify theft can have a large negative effect on your business, and lead you to spend large amounts of time and energy repairing the damage caused. Drilling specifically to smaller business, a study by Verizon identifies the following statistics for small businesses and data breaches:

  • Average cost is between $84,000 and $148,000
  • 60 percent of small business go out of business within six months of an attack
  • 61 percent of all data breaches impacted small to medium size business in 2017

This is a topic that definitely should be taken seriously, but it shouldn’t result in paralysis by analysis — there are things you can do today to protect yourself and your business from identify theft.

1. Set up a virtual private network for your business. 

Wi-fi can be convenient, but using an unsecured wi-fi connection is one of the easiest ways for hackers and other criminals to obtain your personal and business information. A VPN network is not a guarantee of securing your personal and business information, but it is more secure than wi-fi, and relatively simple to set up.

Setting up your business VPN, if you feel comfortable setting up a business email account and profile, is something you can do over a weekend, and is well within your budget.

2. Review your business credit report.

Setting up and improving your business credit is a process that many entrepreneurs overlook, but in addition to giving your business the financing it needs, is also something you need to monitor on a continuous basis.

You are entitled to a free credit report from each of the three major credit bureaus, and can request them either from the credit bureaus or from annualcreditreport.com. Even better, you can configure you account to send you automatic alerts and messages to keep you current on changes to your business credit file.

3. Consider identify theft insurance.

Insurance is a thing that you hope to never use, but it’s something you should certainly give serious thought to getting. This is even more true when it comes to protecting the identify and credit of your business — imagine only finding out that someone has taken out loans in the name of your business when you are looking to expand or grow your business?

There are lots of different options out there, so be sure to work with your CPA or financial professional to find a policy that is a good fit for your budget, and your business.

4. Remember that the IRS will never initiate contact except by mail.

As a CPA one of the most common questions I get, especially around tax time, is whether or not a small business owner should respond to a phone call or email from the IRS. Getting an email, or listening to a voicemail that sounds like it is from the IRS can be intimidating, stressful, and even a little scary, but the answer is a definite no — the IRS will never begin correspondence in any way but via mail.

In other words, never provide personal or business information over the phone, via email, or to an online portal without receiving official confirmation that the request is legitimate.

5. Secure your mobile devices.

It’s easier than ever before to conduct business and engage with customers via your phone, tablet, or other mobile device, but that doesn’t mean your security procedures should be any less vigorous than on your desktop computers.

Passwords are a great first step, but some other suggestions including the following, and can be set up for free.

  • Log out completely from any banking or payment app when you are done using it
  • Avoid downloading any unnecessary apps, or apps that request permissions that seem out of the ordinary, such as access to password/confidential information
  • Watch for shoulder surfers, i.e. be aware of your surroundings and anyone who appears especially interested in your phones content.

Identity theft is a real issue, and can cost you time, damage your reputation, and impact your bottom line. That said, taking a few simple steps today can help you secure you and your businesses information, and won’t break the bank.

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