As a small business owner, you probably have employees. And if you have employees, you have the potential for those employees to engage in fraudulent activities that can negatively affect your business. Any business with employees that are in a position to engage in fraud towards the business (or its customers, for that matter) needs to have certain policies and procedures in place to minimize the risk.

TheStreet.com has an article that discusses what a small business can do to combat employee fraud. While we would like to think the best of people, especially those that work for us, the truth of the matter is that there are bad apples in every bunch, so you need to protect your small business as much as possible.

Below are the four ways TheStreet.com suggests a small business helps avoid employee fraud:

1. Background checks – While the majority of employees that commit fraud have never been convicted of doing so, a background check (including a financial one) may give you the signs that you need to tell what potential employee could cause problems.
2. Keep an eye on things – The smallest of companies may have employees that work alone, without direct supervision or without other employees involved in their work. This sets up the perfect opportunity for employee fraud. Ensure your company has some way to monitor employee activity when they are working solo. Steps include auditing work and installing security cameras.
3. Purchase a fidelity bond – One way to protect your business from employee fraud is by purchasing fidelity bond coverage. Also know as an employee dishonesty bond, a fidelity bond protects your company against financial damage caused by dishonest employee activity.
4. Whistle blowing system – By allowing employees to anonymously turn in other employees for fraudulent activity, you are allowing employees to do the right thing without the fear of retribution from within your tight-knit group of employees.

As long as your company has employees, it can be subject to fraudulent employee activity that results in a financial loss. Take the steps necessary to prevent this activity so that your small business doesn’t have to suffer any unnecessary financial losses.