Hiring the right employee the first time is a win-win scenario for both employers and employees. But a bad hire can cost your business up to 30% of the employee’s first-year earnings—a major loss, especially for small and medium-sized companies.

Some of these costs are tangible, such as recruitment, onboarding, training, and even fraud or legal liabilities. Others are intangible but just as damaging: lost productivity, decreased morale, high turnover, and harm to your brand’s reputation.

The good news? A thorough background check is one of the easiest ways to avoid these risks and make confident hiring decisions.

What Is a Background Check for Employment?

A background check is an umbrella term for various types of pre-employment screenings that help employers verify candidate information and flag potential concerns.

Common Types of Employee Background Checks:

• • Criminal history checks
  • Identity and Social Security number verification
  • Employment and education verification
  • Credit checks
  • Professional license verification
  • Motor vehicle reports
  • Social media screening
  • Drug testing 

Important Legal Notes:

There are restrictions on what you can check and how you can use that information. You cannot:

• Discriminate based on protected characteristics (per EEOC guidelines)
• Collect or use medical information improperly
• Ask about disabilities prior to making a job offer

Make sure you’re familiar with federal and state laws—or partner with a provider who is.

4 Ways Background Checks Protect Your Business

Background screening helps you avoid costly hiring mistakes by:

1. Reducing Risk

Identify red flags—such as past criminal activity, fraudulent claims, or falsified qualifications—before you make an offer.

2. Creating a Safer Workplace

A safe work environment is non-negotiable. Screening helps protect your staff and customers by flagging candidates with a history of violent or disruptive behavior.

3. Protecting Assets and Reputation

Trust is hard to gauge in a resume. Background checks can reveal financial and ethical risks that could lead to theft, fraud, or data breaches.

4. Supporting Compliance

Legal compliance matters. A background screening program that follows local, state, and federal regulations can protect you from costly lawsuits and fines.

Common Compliance Mistakes to Avoid

Even with the best intentions, employers can make compliance missteps during background checks. Avoid these common pitfalls:

• Failure to Provide Adverse Action Notices
  If you decide not to hire someone based on screening results, you must notify them in writing and give them a chance to respond. 
• Lack of Written Consent
  You must obtain written permission from a candidate before running a background check. Skipping this step violates privacy laws. 
• Ignoring State-Specific Laws
  Background check regulations vary by state. Make sure you understand and follow the rules where your business operates. 

Following the Fair Credit Reporting Act (FCRA) and other legal guidelines is essential to protect your company.

How Accounting Freedom Can Help

Accounting Freedom offers easy, affordable, and compliant background checks through our partnership with National Crime Search (NCS).

You’ll gain access to:

• FCRA-compliant criminal background checks
• Motor vehicle and credit reports
• Optional add-ons tailored to your industry
  An easy-to-use online system that integrates with your HR tools

Let us help you reduce hiring risks without adding stress to your process.

Confident Hiring Starts Here

Pre-employment screening is one of the smartest moves you can make during the hiring process. It’s a simple step that prevents major setbacks down the line.

Ready to protect your business and hire smarter? Learn how Accounting Freedom’s Background Check Services can help you screen candidates with confidence and stay fully compliant.