If you have a favourite celebrity that you follow on social media daily, you may come across certain look-alike profiles that pretend to be the said celebrity. Many people happen to believe these fake profiles and get scammed.
This is why social media platforms have integrated a verification process, which qualifies one primary account as the “verified” profile, hence, we now have the “verified” badge next to the profile.
Although this is an unconventional example, the gist remains the same – identity theft, which accelerates the need to identify and verify a unique profile.
When we apply this validation logic to the business ecosystem, organizations are obliged to streamline and standardize their identity protocols. In the business world, identity validation not only prevents you from associating with imposter entities, but also helps you vet an entity or individual’s tax, business, and financial compliance history.
This enables you to check if the entity or the individual is as legit as they make themselves to be.
Apart from validating an identity, verifying a business also brings in certain perquisites, which amplifies and streamlines your business operations on a broader scale. And today, we’re looking at the top 10 advantages of integrating identity verification into your business ecosystem, and the various ways it helps your business stay compliant.
As businesses grow, so does their dependency on external resources. This forces businesses to hire independent contractors or freelancers for certain projects/tasks.
However, companies or firms do not have freelancers on their payroll, so businesses have to maintain vendor files to process the payments.
These payments have to be reported eventually through IRS Form 1099-NEC. But to do any of this, the vendors have to be vetted to ensure tax and business compliance. This is where identity verification comes into play.
Verifying your vendors allows you to confirm their business and tax details, such as the TIN/EIN, name of the vendor or business name, and other information. This, in turn, helps you avoid the year-end business rush, accelerating your vendor on-boarding process and Form W-9 solicitation.
Businesses that follow standardized operating procedures set up a threshold, which has to be followed by every incoming individual and entity.
Integrating identity verification sets you apart from your competitors who may not be as aware of the importance identity holds in the business world.
Further, integrating identity verification in your operational processes means you prioritize verified customers and profiles, which further adds value to your reputational assets.
Associating with an entity or an individual engaging in unlawful, illegal, and terror-propagating regimes will cost you not just financial penalties but imprisonment for violations.
Something as simple as IRS TIN/Name discrepancies can cost you as much as $500,000 and higher (even if you’re a small business).
Check if you’re associating with an individual or an entity listed in the following authorized databases, and save yourself from being heavily penalized by the respective authorities. Do keep in mind that each violation can cost you a minimum of $250,000 to $1.5 Million and even higher plus imprisonment (depending on the severity of the violation).
You can access all checks in one place at Compliancely after a quick sign-up.
Businesses want to mitigate financial losses, that’s a given. However, there’s more to a business association than just monetary loss. Engaging in a business relationship with someone who is listed on the watch lists is a threat to your business’ wellbeing as well.
By verifying your vendors, customers, partners, third-party associations, recruits, employees, and others, you are validating the real identity of the entity or the person, saving you from security violations.
It is essential to note that security violations do not just cause financial and reputational losses but prevent or ban your businesses from further operating.
This shows that identity validation is not just for your basic background screening purposes, but to ensure compliance for your business.
Integrating digital identity validation with your business processes helps you monitor, identify, validate and effectively verify your customer profiles at a faster pace. This way, you do not encounter false positives and avoid verification delays experienced in traditional verification methods.
With an effective identity verification API like Compliancely by your side, you can cut down on paperwork, additional resources to verify the paperwork, and time by at least 35%, ensuring effective profile validation and systemic regulation.
Identity verification allows you to look past an individual or an entity’s “on paper” identity. With identity checks like European Sanctions List, TIN Match, Death Master File, FATCA List, and others, you can virtually check the real identity of any individual or entity according to the records of the authorized databases.
This means you can verify an individual or entity per the records of the US authorities.
When you onboard new vendors, it is important to solicit the vendor business information, such as EIN/TIN and the name of the business/vendor (as appropriate). Identity verification allows you to validate this information instantly by checking the IRS database. If the information turns out to be false or incorrect, you can follow up with the vendor.
However, if the vendor is unable to disclose the real or correct tax information, you can review your business relationship with the said vendor until the correct information is provided.
As much as businesses want to connect and operate smoothly, not having the right tax information of the vendor with you will end up being costly when the IRS rejects your returns for missing TINs or incorrect TINs.
Businesses can ensure compliance for their entity through identity validation. By maintaining and submitting the required paperwork, paying up any pending taxes or penalties, updating the business records with the current information, you can ensure compliance for your business. Identity verification is a tool that helps you verify other businesses as well as your own.
When you ensure compliance for your business, it means that you are in good standing with the local, state, and federal authorities, helping you foster your business growth and partnerships.
When you want to make an informed decision on recruiting someone or partnering with a new entity or associating with a third-party vendor, it is essential to consider their background, compliance status, business history, and more.
Identity verification helps you check the real-time status of the business, its origins, tax and financial background, and other information.
The same verification process applies when validating the identity of an individual, allowing you to make informed decisions for your business.
Many businesses have a controversial past but choose to mask it with false information. When you associate with money laundering fraudulent business, you are risking the viability of your business.
Money laundering companies and individuals alike are always on the radar of the authorities. Every association and transaction of a fraudulent entity is monitored, which brings more attention to your business and its legal nature if left unchecked.
By integrating an identity verification API like Compliancely into your business ecosystem, you can easily identify and verify a business association, helping you avoid huge penalties, risks, and non-compliance violations.
The Real-Time Identity Verification API – Compliancely