HIRING AN EXTRA pair of hands? Make sure your potential new employee won't dip those hands into the company till.

Workers who embezzle or commit other dishonest acts can destroy a business. A report last year by the Association of Certified Fraud Examiners found that small firms, which often lack the checks and balances of big corporations, are particularly vulnerable. The median loss for companies with fewer than 100 employees was $190,000, the report found. The most common schemes? Employees fraudulently writing company checks, skimming revenue, and processing bogus invoices.

The sobering statistic means small-business owners need to be especially vigilant during the hiring process.

"A lot employers who get themselves into trouble with employee problems probably could have prevented it if they did due diligence when they hired the person," says Jennifer L. Goldberg, a labor lawyer with Thelen Reid Brown Raysman & Steiner in Los Angeles.

So don't bring bad help aboard. Here's how to spot dishonesty:

1. Use a formal job application. It's the simplest place to start, but a lot of small employers assume formality is just for Corporate America. A well-designed (and carefully reviewed) application can give you a clearer picture of an applicant's education, skills and past employment. Don't rely — as many small-business owners do — on just the resume. The job application is also a great place to put in writing that supplying false information can lead to dismissal.

2. Ask probing questions, especially about gaps in employment. It's quite possible that an employee who lies on the resume and job application will continue that deception during the job interview. But it might be easier to spot any inconsistencies during a lengthy, in-person conversation. Arrange for others at your company to meet the person as well. And, just like the applicant, make sure you're ready. "The best way to get the most out of a job interview is to prepare — to review the paperwork and ask the questions you need to ask," says Amy DelPo, co-author of "Dealing With Problem Employees." (Besides the paperwork, employers are free to review — and ask about — any questionable activities a candidate has revealed on public Internet spaces such as MySpace, Friendster and Facebook.)

3. Check references and call former employers. If nothing else, you should be able to verify the person's employment and salary history. Often, former bosses don't want to disclose too much information, for fear they could be sued for defamation. The best question to ask, in that case, is simply if the candidate would be eligible for re-hire. If the answer is no, "that speaks volumes," says Goldberg.

4. Do background checks. Especially if you don't have a human-resources department, hiring an agency to check a potential hire's history and criminal background is a sound idea. After all, the new employee may have easy access to sensitive data, such as the company's books or financial statements. "Is it absolutely necessary for every person? No," says Goldberg. "But if it's someone handling the finances? Yes."

5. Consider a trial run. Invite the potential hire to spend one paid week at the office, suggests Tory Johnson, a workplace expert and founder of Women For Hire in New York. "When you interview someone, everyone puts their best foot forward," she says. A week-long assignment (sometimes not realistic if the person is still employed somewhere else) can give you keen insight into their character. And, as an extra benefit, you can weed out anyone whose personality just won't fit in your workplace. "This way, you see if someone is a gum-snapper, or has an annoying telephone manner — the little things that for a small employer can set off the balance of the office," she says.