Hang around a group of small business owners -- folks who have been in the business for a long time -- and you'll find that nearly every one of them has had someone steal from them or commit fraud at one time or another. Small businesses are prime targets for fraud and theft, mainly because they tend to have weak or ineffective fraud controls, if they have any at all! It's imperative for any small business owner to understand common fraud risks and develop some basic processes to ensure they don't happen.
The most common reason people get away with unchecked fraud and theft is because the business owner is simply not paying attention to his accounting. The books aren't reconciled often enough, invoices are not reviewed regularly to ensure they match revenue, and too many people have deposit and check writing permissions for the business. As Scott says, the only other people that should have the ability to write checks for the business, besides you, the owner, are your wife (husband) or your mom.
Having a bookkeeper is great for getting insightful reporting on your business, ensuring your books are done on a regular basis, and your taxes are filed stress-free and on time. But you, the owner, still need to personally review the books on a weekly basis, check the invoices, and maintain a list or database of your contracts, so that you can catch any funny business before it snowballs into a very expensive problem for your business. There's no substitute for being in touch with your business' numbers, even if you have someone else doing the dirty work of categorizing transactions and reconciling bank accounts.
Ask Mitchell and Scott a question:
show@stupidtaxpod.com
Stupid Tax is now on Twitter/X! @stupidtaxpod
Mitchell Baldridge
Twitter: @baldridgecpa
https://baldridgecpa.ck.page
https://baldridgefinancial.com
Scott Hambrick
Twitter: @hambrickscott
IG: @ogscotthambrick
https://onlinegreatbooks.com
https://scotthambrick.com
