Avoid Tax Fraud With These 4 Hiring Tips in 2021

Running a business is rewarding and challenging. The challenges multiply as the business grows and you hire on more people to help get the work done. Hiring excellent workers is one of the biggest challenges. You can never know exactly how well a person will do in the new role until they start. There are things you can do to ensure a good fit and to limit the risk of someone on your team committing tax fraud.

Hiring is one of the scariest parts of running a business. Especially when the people you hire have access to financial information. You want them to be trustworthy, able to meet deadlines and even good in their personal finances. This reduces the chance of you hiring someone who will commit tax fraud and get your business into trouble.

Tip #1: Run Background Checks on Everyone

The truth is, you never know who will move through the ranks and into different positions. You want to be certain the people you hire can handle leadership roles, confidential client information, and even financial data. You want people who can create secure networks and aren’t going to intentionally do things to get you in trouble. The best way to mitigate this issue is to run a background check on everyone. This way you are not discriminating, but you are taking the time to ensure you get the information you need to make a good hiring decision.

Background checks can help you spot financial crimes, violent crimes, and other issues that make someone a liability for your company. People with a financial criminal past are at greater risk of committing tax fraud which is not good for business.

Tip #2: Check on Their Taxes

It sounds a bit invasive, but protecting your business from tax fraud is crucial. People who don’t file their own taxes on time or who haven’t filed them in years are a liability. These people are guilty of tax evasion at best and potentialyl tax fraud themselves. It’s important to ensure clients have confidence in your company. If you employ people who’ve committed fraud, it won’t give a great impression about the integrity of your business.

Additionally, people who don’t file taxes on time, for the same deadline each year may not be qualified to handle your deadlines. It shows a pattern of procrastination if these are constantly late.

Tip #3: Do a Credit Check

People with great credit scores are usually people who are good with money. They have a  favorable debt-to-income ratio, they pay off their debts, and generally have good financial habits. People with a poor credit score are people who typically take on more debt than they can handle. They have a high debt-to-income ratio, and aren’t known for being as responsible with finances. People with lower credit scores are at a greater risk of committing tax fraud. A credit check can help you determine if they are the kinds of people you want handling your money.

While a credit score is only part of the picture, you may want to consider the types of debt a person carries and if there are extenuating circumstances like divorce or a death in the family.

Tip #4: Look at Everything

Hiring the most trustworthy employee is critical if you want to avoid tax fraud. Check out any public profiles. Find out if they are presenting a different face to you than they do online. Look at their work history on LinkedIn. People who are smart enough to commit tax fraud don’t always think about all the discrepancies that their social media posts can paint. If it’s public, it should be taken into consideration. Asking them to log in to their account and show you the private side goes a bit too far.

Call their references, talk to them, ask questions. If there is hesitation on the part of the reference, and there are other red flags, you may want to reconsider if you planned to hire the individual. The truth is you can mitigate the risk of tax fraud, you just need the right hiring plan to help. Businesses fail for many reasons, one of them being financial. Don’t let your poor hiring choices cause your business to go under.