Hiring for a small business is personal - and every new hire has a big impact. One bad hiring decision can lead to financial loss, legal trouble, or damage to your reputation. Background checks help small businesses make safer, more confident hiring decisions. This guide explains how to run background checks for your small business the right way, step by step.
What Does Running a Background Check Mean for a Small Business?
For small businesses, running a background check means reviewing public records and verifications to confirm an applicant’s identity and history before hiring.
A typical small business background check may include:
- Identity verification (SSN trace and address history)
- National criminal database search
- County-level criminal searches
- Sex offender registry check (when applicable)
- Employment verification
- Education verification
- Motor vehicle records (for driving roles)
Small businesses must follow the Fair Credit Reporting Act (FCRA) when conducting background checks.
Why Background Checks Matter for Small Businesses
1. One Bad Hire Has a Bigger Impact
Large companies can absorb hiring mistakes. Small businesses often cannot.
- SHRM estimates bad hires can cost thousands per employee
2. Legal Liability Is Real
Failing to screen employees can expose small businesses to negligent hiring claims.
- EEOC guidance
3. Protect Customers and Employees
Background checks help prevent workplace violence, theft, and fraud.
4. Verify Resume Accuracy
Many applicants exaggerate or falsify information.
- Resume fraud statistics
5. Build Trust and Professionalism
Consistent screening shows employees and customers that safety matters.
How to Run Background Checks for Your Small Business (Step-by-Step)
Step 1: Choose a Compliant Background Check Provider
Avoid DIY searches or free online databases. These are unreliable and not FCRA compliant.
Look for a provider that offers:
- FCRA-compliant workflows
- Digital consent and disclosures
- Criminal searches at the county level
- Clear reporting and support
Step 2: Get Written Consent From the Applicant
Before running any background check, you must:
- Provide a clear disclosure
- Obtain written authorization
Skipping this step can lead to fines and lawsuits.
Step 3: Decide What to Screen Based on the Role
Not every role requires the same level of screening.
Common examples:
- Office staff: criminal history + identity verification
- Customer-facing roles: criminal + sex offender check
- Driving roles: criminal + MVR
- Financial roles: criminal + employment verification
Step 4: Run the Background Check
Once consent is provided, your screening provider will:
- Verify identity
- Search criminal databases
- Conduct county court research
- Compile results into a report
Court data reliability can be found here.
Step 5: Review Results Carefully and Fairly
If something appears on a report:
- Review the offense type
- Consider how recent it is
- Evaluate job relevance
- Follow consistent decision-making criteria
Step 6: Follow Adverse Action Procedures (If Needed)
If you decide not to hire based on the report, you must follow FCRA adverse action steps:
- Pre-adverse action notice
- Time for the applicant to respond
- Final adverse action notice
Benefits of Background Checks for Small Businesses
- Safer workplace
- Reduced hiring risk
- Legal compliance
- Faster onboarding
- Better hiring confidence
- Professionalized hiring process
- Protection of business reputation
Related Blogs
- https://www.bib.com/blog/the-evolution-of-background-checks-from-paper-to-digital
- https://www.bib.com/blog/how-long-does-a-volunteer-background-service-take
- https://www.bib.com/blog/bchex-for-small-business-vs.-bchex-choosing-the-right-background-screening-solution
- https://www.bib.com/blog/how-to-protect-your-small-business-from-a-bad-hire
- https://www.bib.com/blog/how-small-businesses-can-leverage-background-checks-to-build-trust-and-protect-their-brand
Conclusion
Running background checks for your small business doesn’t have to be complicated. With the right provider and a clear process, you can protect your business, employees, and customers while staying compliant.
Ready to run background checks without the hassle?
Bchex offers fast, affordable, FCRA-compliant background checks built for small businesses.
FAQs About Small Business Background Checks
Q: Can small businesses legally run background checks?
Yes - as long as they follow FCRA rules and obtain consent.
Q: How much do background checks cost for small businesses?
Typically $20-$60 per check, depending on depth.
Q: How long do background checks take?
Most return in 1-3 business days.
Q: Can I run background checks myself?
DIY searches are risky and often non-compliant. Use an accredited provider.
Q: What happens if an applicant fails a background check?
You must follow FCRA adverse action procedures before making a final decision.
