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Salt Lake City Bookkeeping Blog

Why Audit Your Small Business Bookkeeper

Posted by Matt Roberge on May 15, 2012 8:28:00 AM

A sharp and reliable small business bookkeeper is essential to the success of your company, but can sometimes be difficult to come by. Even if your bookkeeper is highly skilled, they are only human, and errors can be made – whether accidental or intentional. How can you know for sure if your small business bookkeeper is handling your finances with accuracy and integrity? Keep your bookkeeper honest by auditing them before the IRS audits you.

Be Involved

One huge mistake that many business owners make is not staying involved with their accounting. Never grant your bookkeeper the power to sign checks, utilize bill pay, or make withdrawals. This is a managerial task that should be overseen by you. Request to review copies of invoices before signing checks to ensure that they are legitimate. Ask questions of your small business bookkeeper on a regular basis. If you randomly request to see petty cash receipts or review a recent bank reconciliation, they be able to fully explain and account for everything, without hesitation.

Checks and Balances

The importance of utilizing a CPA for a system of checks and balances cannot be stressed enough. First, a CPA is an excellent resource to double check the accuracy of your bookkeeper. Secondly, your CPA is a tax expert, whereas your small business bookkeeper is not. They will be able to conduct a thorough examination of your financial records to ensure that everything matches up with your tax return. A CPA will work closely with both yourself and your bookkeeper to make sure that everything is accurate, and that everyone is on the same page.

Understand Your Software

Reputable programs like QuickBooks are fairly easy to learn and to navigate. When you understand the basics of your company’s bookkeeping software, you will be able to see how often your bookkeeper is updating your finances, reconciling accounts, etc. This will also keep you up-to-date on the cash flow of your company and will enable you to spot check for any discrepancies.

Don't remove yourself from your company’s finances. Working closely with your small business bookkeeper, asking questions, and keeping a good checks and balances system will keep you out of trouble with the IRS, and will enable you to be as successful as possible.

Is your bookkeeper unreliable? Do you need help getting your finances back in order? Feel free to contact us for accurate business and personal bookkeeping assistance.  

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Topics: Small Business Bookkeeping, Small Business Accounting