For nearly all employers, it is essential to do thorough background checks and screening on all potential new hires. The basic thought is that without a business doing its due diligence, the end result could be a troublesome employee or the potential hire of an individual who could commit a major crime against his new employer.

The difficulty in performing background checks can be staggering for a startup or a small business. There is a wide and complicated pool of background checks for an employer to consider, and the cost for each of these checks adds up fast, multiplied by the number of potential candidates the employer is considering. The total price tag for each potential candidate’s background check varies based on the types of checks and a number of other factors, including the state in which the checks are run. A basic background check, however, typically requires the employer to shell out at least $15 and could cost more than $100 per potential employee. Costs run even higher for more thorough screenings and if checks are performed in more than one state.

It is important for every small business owner to assess the level of risk he takes on if he does not perform extensive background checks or if he does most of the investigative work himself. Any business that involves work with children or the elderly, or gives employees access to ample amounts of cash on a regular basis, should be prepared to take on the costs of fairly thorough background checks. Small businesses that involve general retail work or do not have enough resources to run extensive, formal background checks can consider the following options for investigating potential employee candidates.

Reliable Sources

A small business owner should consider reliable sources of information to which he already has access. This includes friends, colleagues and current employees. Ask for employee candidate recommendations from such individuals. This costs nothing, and the information is trustworthy, and in many cases, is more thorough as many of these people recommend potential candidates they know on a personal level. While using anonymous sources, including websites such as Craigslist, may help the business owner find a larger pool of candidates, the anonymity of the applicants could cause problems and expose the business to greater risk.

Nonprofit Workforce Development Firms

There are likely a number of nonprofit organizations available to the small business owner that work on giving potential employees the training and skills they need to be successful in the workforce. These firms typically offer low-cost or free access to prescreened employee candidates. Educational Data Systems, Inc. (EDSI) or even Goodwill are two good options when looking for candidates who have already met and passed a certain level of background screening.


Asking potential candidates for references is another way to tackle the "do-it-yourself" approach to background checks. Upon interviewing applicants, ask for at least two professional references. Then follow up. The only cost to a small business owner in this instance is the time and effort expended. Often, candidates do not anticipate a great deal of follow-up with references. This can make all the difference between hiring an excellent worker or a slacker who stole from his previous employer. Making a few phone calls per candidate is not overly time-consuming and can save the employer a great deal of loss and hassle in the long run.

Avoid Social Media

Using information about potential candidates from professional networks and websites such as LinkedIn can be incredibly useful and is generally viable information. However, a small business owner should avoid relying on information from social media profiles including Pinterest, Facebook and Twitter. There is literally no good reason for a business owner to dig through an individual’s personal profiles, and information gleaned from such sources could cause the owner to jump to conclusions about the potential candidate. Making unsubstantiated conclusions about applicants could lead to bias and discrimination, and set the employer up for a lawsuit.

The Bottom Line

Extensive background checks are not absolutely necessary. It is pertinent for each small business owner to determine how important these checks are for his specific enterprise. The bottom line is, for most hourly and retail workers, a simple criminal record and Social Security check is all that is needed. When hiring managers or higher-level workers, more extensive background checks may be warranted. It is up to the small business owner to determine how much risk he will take on without checks, how many checks he can afford to pay for and if he has enough resources available to do most of the background research himself.