Over $8 billion dollars was stolen from small businesses through identity theft in 2008 according to Javelin Strategy & Research of Pleasanton, California. Small business identity theft continues to outpace individual identity theft by a rate of 4.1 percent in 2010, compared to 3.5 percent for consumers.

Small businesses are suffering because thieves know they don’t have resources including time and money to put up a strong defense to protect their information against a data breach. Thieves have developed sophisticated techniques to steal private information from the smallest businesses to largest corporations.

Michael Barnett of the Identity Theft Protection Association states small business identity theft is a growing problem. “Thieves have discovered that businesses have fewer legal protections.” Cybercrime and identity theft is a far more likely loss for businesses than fires or floods.

Most of the time organizations will never retrieve their losses because they have less fraud protection and a shorter reporting time, a business is not a “person” or “victim” so state and federal laws treat a them differently, business transactions on personal cards are excluded from “zero liability,” and personal identity theft services and insurance are excluded from businesses.

For most owners their personal and business information are closely tied together, so, a data breach can severely impact both the owner and his company. Just one serious incident could take a small business out. It is important to maintain a vigilant effort to protect their personal and business information.

There are many things a small business should do to protect it’s information including monitoring banking account and credit card balances on a daily basis, check billing statements when they come in, conduct a regular credit check with the credit agencies and Dun and Bradstreet and regularly change passwords used to log into areas where private information is stored. Employees should be trained on what can and cannot be shared with individuals outside of the organization and strict rules must be in place to limit the chances of a theft happening.

There’s one more identity theft protection step most small businesses miss and it could cost them dearly

One of the schemes thieves use is information from registrations with state governments. Most states are “Good Faith Filing” states, which means the information filed about a business or organization with the Secretary of State is simply accepted and recorded at face value. For $10 to $15 in most states, thieves can easily file a change of address, change of officers, directors or registered agent, or even reinstate a previously dissolved company. They may also register a company as a foreign company operating in a different state as their target company.

By manipulating state records in this manner, thieves can obtain the standing and verifiable records needed to deceive creditors and finance institutions, or conduct any number of fraudulent transactions in the business name.

One step they may be missing to prevent small business identity theft is to monitor their state registration information. There are three things every owner can do, that won’t take a lot of time, to prevent or limit the impact of fraudulent state registrations and identity theft:

1. Enroll in Email Alerts – Check to see whether your Secretary of State or Corporations Division business registration website offers free email alert services that can notify the owner when his registration information has been changed or updated. This information includes: name, address, registered agent, and business owner information. Enrolling in such a service can provide early warning of potential small business identity theft.

2. Regularly review your registration information online – If your Secretary of State or Corporation Division doesn’t offer email alerts, you can go to their website and use the public “Business Entity Search” to review the information on file. You should also periodically check any past businesses that you have closed, to ensure that they have not be reinstated.

3. Be certain to file your annual reports and renewals in a timely manner.

Small business identity theft is the new target for identity thieves. Identity thieves feel pretty secure since only one in 700 ever get caught. So, when you compare the risk against the reward most of us can see why criminals have turned to small business identity theft.

The challenge for every business, small or large, is to implement safeguards to protect against breach before it happens.