Beware the wolf in tax collector’s clothing

Recently, a client contacted our office with questions about obtaining an Employer Identification Number (EIN). The client was elderly and seemed to be frustrated with the process of setting up all the underpinnings of a new start-up business.

After a brief conversation, it was clear the client had been taken advantage of by an unethical website. The client was charged over $200 to set up an EIN number that is freely given by the IRS on their website IRS.gov. Outrageous, you say!?  Yes, it is.  But it doesn’t appear to be illegal.

How to avoid getting ripped off…

First of all, if the client had worked with their local SBDC office, this whole situation could have been avoided. While Small Business Development Center counselors may not be lawyers or accountants, we ARE well trained in the art of starting a business.  We are also savvy to many of sneaky ways unethical organizations are targeting small business owners.  Bottom line, enlist a SBDC counselor to take a second look at your plans.  This applies to start-up AND future business planning.

Second, do your research.  The website that tripped up this client was very well done.  It looked like an IRS website, right down to the false look-alike logo.  However, a few clicks on the about-us and FAQ page plainly spelled out that this company was a for-profit service provider that filed the EIN application on the client’s behalf.  Fifteen minutes of additional reading would have sent the client back to Google to search for the correct website.

In conclusion…

If something smells funny, it is probably bad for you! Take the time, do some research and use the no-cost counseling services of the SBDC to help avoid costly errors.  Also, watch the websites you do business on.  There are several instances where “front-companies” are set up online to look like something they are not.  Pause, look at the address bar and see if the URL matches the organization you are trying to reach.

Small business owners are busy, get-it-done individuals. We often don’t like to take time to “complicate” what should be a simple task by reading deeper, asking additional questions or asking for help. If this is you, get your checkbook out.  It is going to cost you eventually.

As for our client, we are doing our best to assist them in getting a refund of the charges.

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