Whether you’re starting a business or growing a small business, you want to avoid those critical mistakes that could mean the end to your entrepreneurial effort. A recent article, “8 Mistakes That Devastate Business Owners” by Susan Schreter for Entrepreneur.com, lists some of the critical mistakes that could be catastrophic for your business:
1. Keep your retirement savings intact.
2. Avoid the lure of sole proprietorship.
3. Read the fine print.
4. Get insured.
5. Get an employment contract.
6. Protect your innovations.
7. Don’t promise what you can’t promise.
8. Check the books.
Of particular interest to me, of course, is #8: Check the Books. As a Virtual Accountant/Bookkeeper, it’s amazing to me how many business owners turn over all of their financial information, including account numbers and passwords, then wash their hands of all things numbers-related. This is a recipe for disaster, folks! I’ve worked hard to earn the trust of my clients, but not all bookkeepers out there are quite as scrupulous. What can you do to protect yourself?
- Pay attention! Review the checking account register every now and then, looking for suspicious charges. Be the person who opens the checking account statement and look for irregularities. Pay attention to statements from your vendors; are there charges there that you thought you paid? By paying attention to your own financial activity, you will greatly increase your chances of catching fraud before it causes serious damage.
- Review vendor statements. Fraud doesn’t always come from internal sources. Be sure that your vendors are charging you as agreed and aren’t sneaking in new charges without your approval.
- Review revenue statements. As Ms. Schreter points out, “Are you sure your company is really collecting all of its internet-search-related revenues, or is your web developer rerouting your internet earnings for some extra beer money each week?”
- Segregate duties. If you have a professional bookkeeper handling your books, it’s a good idea to have a separate tax professional helping you at year-end. Having a separate set of eyes to review your information can be invaluable in catching errors or out-and-out fraud.
Bottom line: Pay attention to the financial health and well-being of your small business to prevent the kind of catastrophic fraud that could lead to going out of business.
Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.