Tax Information Security

Tax Tip from the week of October 22, 2018

Keep your business tax info safe

Business taxes involve a lot of paperwork, and those papers typically contain a lot of personal financial information. Are you taking steps to make sure your records are secure? Here are a few tips to help:

  • Secure sensitive employee materials. As an employer, you’re required to collect Social Security numbers and other identification, such as copies of drivers’ licenses. Keep this sensitive information secure by restricting physical access to printed or copied documents, using passwords on your accounting software, and creating a unique identifier for employee IDs.Some states require that you safeguard the information obtained from job seekers, such as shredding applications after a certain period of time.
  • Protect important numbers. Truncate Social Security numbers on the paper copy of Forms 1099 that you send to your vendors. Instead of displaying the full nine digits, replace the first five numbers with asterisks or Xs.
  • Create an information privacy policy. Establish a company policy for protecting the information your customers provide. For instance, require your employees to shred account receivable records instead of tossing them in the trash, or employ the services of a document-shredding company.
  • Encryption is key. When sending data to your accountant for tax return or payroll preparation, be sure to use encrypted email or upload files to a secure digital storage service site.

Keeping accounting information from falling into the wrong hands is a growing concern for many businesses. Give us a call if you have questions.

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