Small Business & Identity Theft – Part 1

Have you ever noticed the persistence shown by an ornery squirrel determined to get inside a bird feeder? For small business owners, the squirrels’ perseverance serves as an example of how determined criminals are to steal from you or commit fraud in your name. But there is something you can do about it. NOTE: Even if you are an individual and not a business owner, much of this advice applies.

Know Thy Banker’s Policies

Did you know that under the Uniform Commercial Code (UCC) that businesses have shorter reporting timelines, less protections, and higher liability for fraud than do consumer banking accounts, and that banks can disclaim certain obligations through amendments to their banking agreements.? Know your bank’s policies because they have a huge impact on your business’ liability for fraudulent transactions.

Don’t Go Out on a “Wire”

If your business uses wire transfers, learn about multiple-factor authentication that requires two or more party approval for outgoing wire transfers. If a criminal initiates a wire transfer, the extra control can help prevent the transfer from being approved and completed. And if your business doesn’t use wire transfer, ask your bank to block wire transfers altogether or at least set a maximum amount.

Be Curious

Monitor your business accounts daily. Frequent review catches suspicious or fraudulent activity quickly to reduce losses. Online banking allows business owners to quickly and easily log in to your bank account to verify that it matches internal reports. Online banking also eliminates mailed paper statements which are becoming more and more of a risk for theft or exposure.

Don’t Share

When you access your banking accounts, use one secure, dedicated computer fully equipped with up-to-date anti-virus / anti-spyware / internet security software. Don’t let anyone else use that computer and never use it for non-business activities like email or web surfing. Use complex passwords that can’t be guessed by others. Some use a line from a favorite song or poem; you don’t have to write it down, but hard to duplicate. And of course, never do banking from any Wi-Fi hotspot (Starbucks etc.)

Beware of the Phish

Designed to trick you into divulging confidential personal and business account information, phishing email scams too often “look” legitimate but aren’t. Legitimate financial institutions and government agencies never ask you to verify or provide information through email. Don’t respond to the email, and don’t click on any links or open any attachments. Doing so can cause spyware to be installed on your computer. Report all such activity to your bank’s fraud department.

Next month we’ll review how to protect and monitor your business information. For now, be safe, and remember, most of these steps can be taken by everyone – whether a small business owner or as an individual.

The Wild West of Business Basics

We don’t need to go west to find both bronco riders and steady groomers among entrepreneurs and business owners. The entrepreneur slips one boot in the stirrup and with the other straddles a bucking bronco. The bronco is a product or a service so new and innovative that the risk of failure is great, but the sweet smell of success inspires the rider to hang on for what is likely a wild ride. His horses are often ridden hard and put up wet.

The small business owner is less of a cowgirl. She typically deals with known, established products or services, limited or controlled growth, and continued profitability. She’s more likely to spend time grooming her horse, always looking for the best tool to get the job done in the least amount of time with the greatest comfort for the horse.

Different approaches to business, but similar financial risks. Financial management for a small business is more than keeping an accurate set of books and balancing the checkbook.

Here are a few thoughts on achieving financial success:

  1. Save in order to survive the inevitable down periods and for retirement, even with a fluctuating income.
  2. Never mix business and personal funds.
  3. Keep costs below income; live below your means.
  4. Operate on a strict budget and let someone else manage the finances.
  5. Stay out of debt and pay down start-up debt as quickly as possible.
  6. Pay bills on time and avoid leaking money on fees and interest.
  7. Hire good people and pay them well. Loyalty is priceless.
  8. Keep expenses in line and negotiate everything.
  9. Always know where you stand financially.
  10. Seek professional tax advice. It pays for itself.

I’m the first admit the list could be longer, but that’s not the point. We just want to remind our business friends and colleagues that it’s always a good time to review the basics.