Business fraud affects individuals and other companies. The actions of one individual or organization can cost other people or businesses negatively and can also undermine the reputation of a particular industry or a specific business.
The different kinds of fraud are as varied as the kinds of businesses that people may start, but there are some kinds of business fraud that are more common and widespread than others. If either you or your business partner engages in any of the behaviors below, you might find yourself facing criminal charges that could affect your freedom or damage your company’s ability to operate.
Payroll, expense or benefits fraud
Employees receive compensation for time worked. They may also receive paid time off benefits and reimbursement for certain employment-related expenses. For example, some industries give workers a monthly stipend for electronic equipment, while others may provide someone with a company car because they frequently drive for work.
People working at a company could fraudulently alter their payroll records or claim benefits that they shouldn’t receive. It is much easier for someone in a high-ranking position at a company to engage in this kind of misconduct. Inappropriate bonuses, alterations to time clock records and allowing people to write off personal expenses could all lead to allegations of fraud.
Whether you provide contract services to other companies, cooperate with insurance programs or sell goods to consumers, fraudulent billing is a major issue in numerous industries. Some people will bill for more time, services or materials than they really provided.
Others might create completely false billing statements, like medical practice is submitting a bill to an insurance company for an appointment that never occurred. Although billing fraud sometimes seems like a way for a company to make more money, it can quickly lead to legal scrutiny and criminal charges.
Taxes can be one of the biggest liabilities your business has to worry about, and most savvy executives and owners will try their best to minimize what they pay in taxes. However, there is a crucial distinction between tax minimization for avoidance and tax fraud or evasion. If you get too creative with your accounting practices, the result might ultimately be criminal charges against your company and a major past-due tax bill.
Recognizing some of the most common forms of business fraud can help protect your business from criminal allegations.