How to Do Background Checks From Home

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Home-based business may be convenient, successful and profitable, as long as you register and operate your business legally and professionally. Background check businesses qualify as consumer reporting agencies, according to the Federal Trade Commission, and are subject to the regulations set forth in the Fair Credit Reporting Act. In fact, a consumer reporting agency refers to any person or entity that receives compensation for gathering information about a consumer's credit, reputation or character for a third party. Background checks may include criminal, credit, employment and medical history, as well as workers compensation details, current licenses, education, driving records and references, according to the Privacy Rights Clearinghouse.

Familiarize yourself with the Fair Credit Reporting Act. To legally perform background checks from home, you need to have a full understanding of your responsibilities under the act. For example, you need to know that an employer must give a potential employee notice that a background check will be requested. Additionally, because of privacy laws, certain information is not subject to background checks, and could result in legal problems for the company requesting the information and for the consumer reporting agency that provides the information.

Choose a name for your business. Your business name must be included on all paperwork and applications relating to your business, including license applications and permits. The legal name for a business with only one owner is automatically that individual's full name, according to the Small Business Administration (SBA). If you want to name your business something other than your name, many states require you to register a fictitious or “doing business as” name. The SBA provides a listing by state that identifies which states require individuals to register alternative business names, and provides contact information or links to help you get started (see Resources).

Consult with your local Small Business Development Center, which can assist you with marketing and organizing your business. A service of the SBA, SBDCs also offer low-cost training to new business owners.

Contact state and federal revenue agencies to obtain the appropriate tax numbers for your business. State resources are available through the SBA website. Apply for an employer identification number (EIN) as an alternative to using your personal tax number for your business. The IRS provides an application for an EIN on its website (see Resources).

Obtain any required licenses or permits. The SBA provides an interactive database for licensing requirements by state (see Resources). Contact the applicable licensing agency for applications and regulations that apply to you and your business.

Advertise your background check business. Advertising laws ensure that any company or individual doing business provides truthful information when marketing a product or service. Online marketing is no exception. The SBA provides advertising guidance to help you promote your business without violating advertising regulations (see Resources).