What You Need to Know About Backgrounds Checks for Small Businesses

Your business may still be establishing itself, but it doesn’t mean you can skip conducting the relevant background checks on candidates that come into the business. In fact, running these checks may prove to be more beneficial long term. For instance, employing someone who’s not as competent or skilled may easily affect your company's morale. Come to think of it, if one person couldn’t effectively take on the role, that means another employee would have to step in. This, then, can snowball into resentment towards the management, burnout, and resignation.

The good news is that since your business is still growing, you probably only have fewer employees. Hence, background checks for small businesses are usually a lot simpler compared to big companies.‍

What is a Background Check?

A background check reveals information about your candidate which you may use to ascertain if he or she is suitable for the position  you’re hiring for. There are many types of background checks, like:

• Right to work checks to determine whether the person has the legal right to work in the country. In the UK, conducting the right to work check is the employer’s legal obligation. 
• Professional qualifications check to see if the candidate has the skills and experience required for the role. 
• A criminal records check ensures that you’re not hiring someone with a criminal history that may affect the job and the safety of the people.  

As an employer, you must run the relevant background checks to ensure that the prospective hire has the right qualifications to fulfill the role effectively. For example, if the role requires the person to handle company and business finances, you might want to run a credit check on them. 

Why You Should Run Background Checks for Hiring

Are background checks for small businesses necessary? As mentioned earlier, carrying out verifications on staff has a lot of benefits. Building a trusted team, after all, means you have a reliable workforce that can push your business forward. 

Furthermore, some checks are required by law, like the right to work check in the UK. In the financial sector, the law may oblige you to conduct credit checks to protect company and customer finances and sensitive information. 

Why are Background Checks Important for Small Businesses?

Conducting background checks for small businesses can promote business efficiency and safety. Here are the reasons why you must not skip them:

You’ll build a trusted, reliable team

When you conduct employee background checks for small businesses, you’ll be able to review details that can point to the candidate’s skills and qualifications. Reference checks can also uncover details on the person’s attitude at work. Hence, you may determine whether or not they can contribute to your business goals. 

You can reduce organizational risks

Did you know that employee theft costs businesses in the US around $50 billion annually? Furthermore, 22% of small businesses have had their employees steal from them. 

Employee background checks for small businesses can determine if the candidate has a criminal history. This means you can see if hiring them increases the risk of crimes, such as theft. 

Big companies may be able to recover right away from thefts of a few thousand dollars, but this might mean the end for a small business. 

You can support workplace safety

Conducting background checks can help small businesses identify potential security threats and establish a certain level of trust between employer and employee at the beginning of their relationship

You can manage liability risks

Bad hires can lead to legal consequences on your part. For instance, in the UK, if you employ someone who cannot legally work in the country, you may pay a huge fine and face litigation. 

Furthermore, if an employee causes an incident or does something that compromises the safety of the other employees, clients, and the public, you may be held liable for it. 

You can avoid incurring expenses due to a bad hire

What makes background checks for small businesses important is they can help you avoid expenses you might get from hiring someone not suitable for the job. 

Someone who cannot carry out the role may not be as productive as required or they may make mistakes frequently. This can mean financial losses to your business. Furthermore, a lack of skills means someone has to pick up the slack, which can result in burnout. 

Over time, these consequences may pile up, leading to a high turnover rate, which also costs your business. You see, according to reports, the average cost of turnover per employee who’s earning £25,000 is around £30,600. 

Why Partner with a Third-party Provider for Your Small Business Employee Background Checks?

Given the importance of background checks for small businesses, it’s easy to realize why you must not skip them. However, conducting them on your own may be overwhelming considering the limited resources and personnel. Thus, if your business is still growing, you might want to consider partnering with a consumer reporting agency or third-party service provider who can conduct background checks for you. 

Here are some of the reasons why getting background check services for small businesses is a good idea:

It saves time

A prospective employee may need several background checks, like professional qualifications, criminal records, etc. Doing each of these may be time-consuming.

Meanwhile, a third-party service provider, like Veremark, can take care of everything. Often, all you need to do is provide the candidate’s name and other details and customize which checks you want completed. 

This saves you time, allowing you to focus on other important tasks, such as managing your business and taking care of your employees. 

It’s more cost-effective

You might think that partnering with a consumer reporting agency may be more expensive. But because it saves time and improves compliance with laws, it’s easy to see how it’s cost-effective. Moreover, some background check services for small businesses, like the one Veremark offers, are scalable.  

Whether you want one background check for just one candidate or several for 100 prospective hires, Veremark can support you. We have no lock-in - you can pay only for the checks you want completed. In the US, for instance, we can conduct identity verification and reference checks for only $24 per applicant. 

You’ll get the best talents fast

Consumer reporting agencies often have access to databases to conduct extensive background checks for small businesses. This means they can collect the relevant information to help you choose the best talents for the positions you’re hiring. Likewise, the service usually has a faster turnaround time, which means your talent can start supporting your business sooner rather than later. 

It improves compliance

Reputable third-service providers are experts in the field of background screening. Hence, they know which laws and regulations to look into to ensure that each check is compliant. This can help reduce the risk of litigation should problems arise later on. 

Overall, these advantages give you more confidence in your hires - that you have employed the people who can contribute to the success of your budding business. 

What Shows up on a Small Business Background Check?

Employee background checks for small business may include the following:

Criminal History 

This involves checking an individual's criminal records, such as arrests, convictions of felonies and misdemeanors, court records, and any outstanding warrants. Criminal record checks are essential to protect client and customer safety. 

Employment Verification

This confirms the individual's work history, including job titles, employment dates, and reasons for leaving. This is important particularly if you want to verify their skills and their attitude at work. 

Education Verification

This confirms the individual's educational history, such as degrees or certifications obtained, schools attended, and dates of attendance.

Professional License Verification

Many jobs require people to pass licensure exams. Professional license verification can ascertain a candidate’s license standing - is it still valid or already expired? Are there restrictions to what the person can do? Is their license revoked for some reason? 

Pre-Employment Drug Screens

Many businesses require drug tests before hiring a candidate. Drugs, after all, not only affect a person’s productivity but can also make a person a danger to others depending on how serious their drug use is. 

Of course, this is not an exhaustive list. The background checks an employee needs depends on the law and their roles, after all. For instance, if the job requires physical tasks, you may want to run a Fit and Proper Check. 

Background Check Laws Small Businesses Should Know (US)

Background checks for small businesses are crucial, but remember that you cannot conduct them without considering the relevant laws and regulations. Failure to comply with the laws may put you and your company in a precarious situation. Some of the laws to bear in mind are:

Fair Credit Reporting Act (FCRA)

In the US, this federal law governs the accuracy, privacy, and permissible use of information gathered by consumer reporting agencies, including background check providers

State Background Check Laws

Each state may have laws for employee background checks for small businesses. Hence, it’s a great idea to discuss these laws with your legal team or lawyer before proceeding with the checks. For instance, some states have Ban the Box laws, which push criminal history checks towards the end of the hiring process. 

Data Privacy Laws

There are laws in place to protect people’s private information, so be sure to collect, store, and discard information in accordance with the relevant data protection policies. 

You might also want to check if you’re only allowed a certain level of assessment. For example, in the UK, certain roles only allow you to conduct the standard criminal record check. However, you may be allowed to conduct a more in depth criminal history check for roles under the education or healthcare sector. 

Conclusion

Your business may still be growing, but that doesn’t mean you can skip on conducting background checks. Keep in mind that these checks help you build a trusted and reliable team, protect your clients and existing employees, and preserve your company’s reputation. 

If you have a limited workforce and resources, it’s a great idea to partner with a third-party service provider, like Veremark, to conduct these checks. Not only will the checks be comprehensive and fast, but they are also compliant with the important laws and regulations on background screening.