Whether your business is an S-Corp, a C-Corp or an LLC in the Chicago area, you have one thing in common this time of year; it’s time to file your taxes. And, filing taxes involves exchanging sensitive financial data with several entities, including your financial advisor and CPA. Because protecting your financial data with the proper technology tools becomes an even higher priority during the late winter and spring months, you may employ the support of a Chicago IT services provider who can safeguard your financial data.
Why does financial data protection matter?
The sensitive nature of financial data, whether personal or corporate information, makes data breaches extremely detrimental to individuals and organizations. For a variety of reasons, you must strive to protect your financial data.
- Privacy Concerns – Identity theft has become a real threat, with over 824,000 incidents reported to the Federal Trade Commission (FTC) in the first three quarters of 2024. The exposure of sensitive data such as bank account and social security numbers enables thieves to empty bank accounts or make fraudulent purchases under an assumed name.
Businesses, too, can suffer financial loss, lose a competitive edge, or encounter noncompliance issues when sensitive financial data such as financial statements, pricing strategies, payroll information, or personal customer or vendor data breaches occur.
- Regulatory Implications – Organizations handling sensitive financial information must comply with a variety of regulations applicable to their jurisdictions. The European Union outlines their data protection compliance standards in the General Data Protection Regulation (GDPR). The California Consumer Privacy Act (CCPA) protects the rights of consumers to know the data companies collect on them and to opt out of such collections.
Chicago area organizations that process payment card transactions must comply with the Payment Card Industry Data Security Standard (PCI DSS), guidelines regulating the protection of cardholder information. If these regulations apply to your organization, an IT management services group can help you stay PCI compliant.
- Legal Repercussions – Exposing or mishandling personal or corporate sensitive data can open an organization to lawsuits with significant financial penalties. A business who finds itself outside the law when handling critical financial and personal information can lose the trust of its customers and employees as well as its reputation.
By exposing sensitive financial information, publicly traded companies risk significant loss as well as i legal issues as the data breach can affect stock prices, upset trading volume, and drive market sentiment.
- Competitive Risk – What would happen if a data breach exposed your revenue trends or investment plans to a competitor? That information could give your competitor a significant edge. Along with a competitive edge, the exposed financial data could be used against your organization in negotiations for a variety of reasons including favorable pricing and terms.
What common threats endanger your financial data during tax season?
The risks to your financial data come in the form of common cyber-attacks.
- Data breaches and leaks - In a data breach or leak, hackers take advantage of vulnerabilities in your network IT infrastructure or cybersecurity applications to access sensitive corporate and personal data.
- Social Engineering and Phishing Attacks - Phishing attacks trick individuals into sharing sensitive information. Fraudulent emails or text messages urge the victim to click a malicious link, open an infected attachment, or entering personal information on a fake website.
- Malware and Ransomware – Malware (malicious software) compromises the security or operations of an IT network or device and is designed to steal data, obtain unauthorized access, or upset operations. Ransomware gains access to sensitive data, holding the information hostage until a ransom is paid.
What are some best practices you can employ to protect your financial data?
- Employ Tools to Support Data Security
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- Two-Factor Authentication – Employ two forms of identification to authenticate users of your applications.
- Cybersecurity Software – Use tax software that includes its own security, and maintain robust antivirus and anti-malware tools, updating these applications regularly.
- Secure Wi-Fi Connections – Use virtual private network (VPN) software and encrypted connections.
- Conduct Cybersecurity Training
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- Strong Passwords – Train your employees to create unique passwords for access to all financially-related information; employ password manager tools to help your team secure their passwords.
- Security Awareness – Teach your employees to be alert to suspicious emails, attachments, or links to avoid phishing and social engineering schemes.
As the time nears to file taxes, protection of financial data becomes a high priority for Chicago businesses. But protecting financial information matters throughout the year, heightened at tax time by the need to exchange this data with several entities. As a financial consultant, CPA, or CFO, how can you protect your data while preparing your tax information, particularly when information security is a year-round risk?
A Chicago managed IT services group can focus on protecting your financial data while you pay attention to your business. These professionals not only have the tools to monitor threats to your IT infrastructure, but they can also help you upgrade your hardware and software to mitigate risk. And, should a threat occur, their licensed specialists can help you recover the integrity of your data.
Whether you contract with a Chicago managed service provider for all your IT management needs or simply augment your own team with their services, the professionals at JMA Consulting can help secure the storage and transmission of your financial information during tax season and throughout the year.