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Background Check Due Diligence: Why Is It Important for Small Businesses?

Background checking is a necessary procedure to verify the identity of a person. This is necessary to avoid hiring fraudulent people who are trying to infiltrate the organization either for malicious purposes.

Companies rely on records like police report and education to verify an individual, and they can also check someone’s employment history to verify if they were involved in previous disciplinary actions that could be detrimental to the growth of the company.

Aside from the corporate setting where background checking is a norm, all aspects of transactions involving money would require background checks, like purchasing a new car or house. Buying firearms would also require background checks, to verify that the buyer is not suffering from any mental issues that could drive them crazy and use their weapons to hurt others. There are various types of background checks, each with a different purpose.

1. Employment Background Check

This is performed by a company towards an individual who is trying to apply for a job. They are running background checks so that they could prevent hiring somebody who has ill-intent of entering the company. People with bad records can be a liability to the company, and as a result, more than 70% of all employers in the country are running background checks to make sure that no one with a bad record will be joining the company. An employment background check would rely on the applicant’s previous working history, and the company could work with the previous organizations that an applicant has worked for in the past to verify all of the information that he or she provided.

2. Criminal Background Check

it is important to check the criminal records of a person or an organization to verify if they have been involved in a major crime. Employment, firearm purchase, military enlistment, and adoption procedures would require a criminal background check, and if the individual tests positive for any crimes that they did in the past, they might not be able to get the job that they wanted, or be enlisted in the military. They could also be prohibited from buying a gun or from adopting a child because of the previous criminal records attached to their names. The information about the criminal records of an individual can be accessed with the help from the police or the FBI.

3. Universal Background Checks

the National Instant Background Check System can perform universal background check especially when someone wanted to purchase a firearm. There are factors that should be considered before someone can purchase a firearm, and it includes the condition that an individual should not be involved in any felony offenses or convictions. Universal background checks are also applied to prevent terrorist threats and other violence that can arise from someone who is suspicious. With universal background checks in place, a high sense of security can be enjoyed.

4. OIG Background Checks

this is conducted by the office of the Inspector General to prevent people with fraudulent past to be eligible for social services and other benefits from the government. This is required to ensure that everyone will be treated fairly, and all of the benefits provided by the government will be given to everyone who deserves it. There are people who are included in a sanction that does not deserve any assistance from the social security department, and they can be detected with OIG Background Checks. Companies who will fail to detect people who had previous fraudulent cases especially with their social security benefits could face heavy penalties.

Other types of background checks include fingerprint background checks, which will require someone to submit a digital pair of their fingerprints and it will be matched into the database, sorting profiles to verify if it belongs to someone else. Criminal history is also a form of background check that would enable an organization to detect if a person applying for them deserves to join them. Credit Background Check, on the other hand, is used by financial institutions to verify those who are trying to get financial assistance.

In a private equity due diligence investigation, background checks are important especially for trying to verify the identity of an individual, and it will help small businesses in hiring the best person.


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