Most of us are aware of the risks of personal identity theft, but have you ever considered that your business itself might also be the subject of identity theft?
This article details the risks associated with allowing your business to be "administratively dissolved" by its state registrar. Although every state has specific rules and procedures for formally dissolving a business, many owners fail to take these steps, instead simply "walking away" from the business and allowing it to be automatically dissolved by the state. In addition to the penalties and fines that may be associated with failing to pay annual registration fees and taxes, allowing your business to be administratively dissolved makes it an easy target for fraudsters. This is especially true because most states have relatively few safeguards in place for confirming who can update a business entity's registered information.
There are many variations of this business identity theft scheme, but most involve the fraudster paying relatively nominal fees to reinstate an administratively dissolved business. Because the business owner is likely not paying attention, the fraudster can then update information such as officer names and mailing addresses, and subsequently begin making purchases and signing contracts under that business' name. Unsuspecting owners can be held responsible for liabilities generated by these fraudsters, despite having no awareness of the activities taking place.
Formally dissolving a business is typically not a time-consuming or expensive task, and by doing so, business owners can protect themselves from the risk of business identity theft.
