Avoiding Costly Scams When Starting Your Business: Tips for Protecting Your Wallet
Starting a new business is an exciting and challenging journey, but it’s essential to be aware of potential scams that can drain your wallet and derail your progress. Some unscrupulous individuals and companies prey on new business owners, offering “helpful” services that are unnecessary or overpriced. In this blog post, we’ll explore some common scams to avoid and provide tips for protecting your hard-earned money.
Don’t Pay for an EIN
One of the first things you’ll need to do when setting up a business is to obtain an Employer Identification Number (EIN) from the IRS. While some websites may offer to obtain an EIN for you for a fee, this is a scam. The IRS provides EINs for free, and the application process is straightforward and can be completed online in just a few minutes. Don’t pay for something you can get for free!
Beware of Phantom Corporate Setup Fees
Another common scam involves companies charging exorbitant fees to set up a corporation or LLC for you. While there are legitimate companies that offer these services, some will charge hundreds or even thousands of dollars for something you can do yourself for a fraction of the cost. Before paying for these services, research your state’s requirements for forming a business entity and consider doing it yourself or hiring a reputable attorney to help.
Avoid Fake Business Licenses and Permits
Some scammers may try to sell you fake business licenses or permits that you don’t actually need. Before paying for any licenses or permits, check with your state and local governments to determine which ones are required for your business. In most cases, you can obtain these directly from the government agency at a much lower cost than what scammers are charging.
Tips for Protecting Yourself
To avoid falling victim to business setup scams, keep these tips in mind:
- Research your state’s requirements for setting up a business entity and obtaining necessary licenses and permits.
- Be skeptical of companies that promise to expedite the process or offer services that seem too good to be true.
- Don’t pay for something you can get for free, such as an EIN.
- Read reviews and check the Better Business Bureau before hiring a company to help with business setup.
- Consider working with a reputable attorney or accountant who specializes in small business services.
Starting a business is a big undertaking, and it’s natural to feel overwhelmed or unsure at times. However, by staying informed and cautious, you can avoid falling prey to scams and focus on building a successful and thriving business. Remember, if something seems too good to be true, it probably is. Trust your instincts and do your research before handing over your hard-earned money.
