What Can Small Business Owners Do To Prevent Fraud And Theft?

Discovering that the employees you trust for many years have been stealing from you is definitely devastating. More often than not, fraud and theft happen when you least expect it. When you have trusted people around you, there are no nagging doubts that you will fall victim to these crimes. As a business owner, being cautious is necessary. Even if you have the most trusted employees, fraud and theft can take place when you do not keep your books in check. Here’s a guide to preventing or reducing employee fraud and theft:

1. Post a code of conduct

Some business owners implement stringent policies so fraudulent activities do not go unchecked or unpunished. For instance, Walmart does not allow employees to accept a cup of coffee or a bottle of beer from a vendor without paying for it. It sends a signal to everyone that the company is not tolerating the illegal behavior. Although not everyone can be as strict as Walmart, posting a clear code of conduct will make employees aware that misbehavior is unacceptable. The code should be given to everyone upon hire. There should also be a written acknowledgement to ensure that everyone agrees and understand it. Being the enforcer of the code, employees are also expecting you to lead by example. What is the point of following strict rules if employees see you use company property or take home merchandise?

2. Create organisational checks and balances

For small business owners, wearing many hats is normal, but multitasking can be dangerous if it involves opening the mail, handling payments and deposits and filing transaction documents. These aspects of the business should not be assigned to one person only. Assigning the same task to the same person only spells trouble. There should be separate people for managing accounts payable and receivable, handling purchasing and more.

3. Have clear policies and procedures

While your bookkeeper takes care of bank and credit card statements most of the time, there should be another person to reconcile bank statements. However, this person should not have the ability to modify or enter transactions in the accounting system. The modification must be restricted as this only opens the door to committing fraud. Confidential financial information must be locked up. Enforce rigorous key control and have a computer-system access. It is common for business owners to retain login information without realising that a departing employee still has it.

4. Observe employees’ behavior

A tell-tale sign that your employee is about to commit or committing theft or fraud is when there are changes in their behavior. Have files been misplaced? Are they giving customers excessive attention? Are they routinely working early or late when no one else is around? While you may dispense it as working extra hours because they love their job, it is also a sign that they do not others to see what they are doing. Even minor blips in your operation is already a red flag.

Once you feel that something does not feel or look right, it is probably not. Take time to investigate as you could be losing a big amount of cash.

What Exactly Is Bookkeeping And Why Is It Important?

We have been told time and again about the importance of bookkeeping, but we always find ourselves procrastinating because it is the job we always have a love-hate relationship with. Bookkeeping is defined as the storing, recording and retrieving of financial transactions of an organisation. It includes tasks such as sales, receipts, payments and purchases. There are several methods involved in bookkeeping, but one thing is for sure, we cannot maintain the finances without bookkeeping.

It helps you manage your cash wisely.

Part of operating your business is to manage customer and supplier accounts. With bookkeeping, you will be able to create a business player, track deposits and monitor payments. You will also know how to make sure that every dollar spent is intended for your business. When you update your books, you will know the financial state of your business. If you have an outstanding bill, income information, unpaid invoices or payroll estimation, you can gain access to these by simply looking at your financial statement.

It helps you make a decision

Thinking about expanding or growing your business? It will not be easy without knowing your financial performance. Banks will not trust you if you have unpaid bills and delinquent accounts. If your records show that you have the ability to pay a loan, the bank will not have any second thoughts of approving your loan application. However, if your records indicate that you are running low on capital, it will be difficult for you to take out a loan.

It protects your small business.

Can you imagine operating your business without hiring a qualified person to take care of your books on a daily basis? Can you be confident that your business is on the right track if no one ensures that your checks will not bounce and you have enough capital for expansion? Will you be able to have a good night’s sleep knowing that you are falling behind your payment schedule as you do not have a bookkeeper to remind you when your payment is due? Not having up-to-date records will run you the risk of losing money. Business growth opportunities are missed and payments will not be made in a timely manner.

Bookkeeping should not be underestimated as it is an integral part of every business regardless of the size. If ever you find yourself ignoring bookkeeping, think about its repercussions. Without bookkeeping, your business will suffer from the lack of financial stability for sure.

How To Save Time In Bookkeeping?

One reason most business owners are tempted to procrastinate when it comes to dealing with bookkeeping is because the task is time-consuming. If you have a very busy day, bookkeeping has to take a backseat. Sometimes, you sacrifice quality to save time. Bookkeeping is essential to ensuring that your business runs smoothly. It does not require extended amount of time by giving your bookkeeping system an overhaul.

1. Automate Payroll System

Manually processing your employees’ paychecks can demand a large chunk of your time. Aside from going through each employee, you will have to print the checks, approve the hours, sign and date the checks and even mail them. Automating your payroll system bypasses these processes. You will only have to focus on one task as the automated payroll system can handle all the tasks. Your job is to approve the payment and once done, the checks will be sent out immediately. Your employees will also get the checks faster.

2. Create An Online Banking Account

Taking several trips to the bank can be tiring. This is why an institution that offers online banking can give you convenience as you no longer have to drive out of your way to deposit checks or withdraw funds. All you have to do is to click a few buttons so you can process your bank transactions. As a result, it will be easier for you to issue refunds and pay vendors. There is no need to worry about falling behind payments schedule. You can also get instant access to debits, credits and account balances.

3. Purchase Reliable Software

Another technique that will keep your bookkeeping to a minimum is to invest in bookkeeping software so you can record your deposits and debits, track your bank transaction and create financial reports. You will no longer have to worry about creating a manual report because the software takes care of your bookkeeping tasks, making sure you have balanced and accurate books. All you need is to dedicate regular time so you can review your report.

4. Create A Separate Account For Your Business Finances

Although most business owners make it a habit to have a separate business account, there are still small business owners who do not know the negative implication of mixing personal with business accounts. It is easy to lose track of your spending habits if you do not have a separate account for your business finances. However, this can also affect your cash flow as it is already too late for you to realise that you failed to monitor your financial activity.

How To Keep Your Business Safe From Fraud?

If you are the type of business owner who looks over your shoulder, checking whether or not your employees are committing fraud is a sign that you are experiencing embezzlement. It has been found that 28% of small business owners have experienced embezzlement over the years. This is alarming because before fraud can be committed, an employee has to earn a business owner’s trust. Embezzlement is costly as it results in paying penalties and interest on underpaid or unpaid bills and taxes.

There are three factors that can lead to fraud:

-Rationalisation
-Opportunity
-Pressure

Bookkeeping reduces the risk of embezzlement. Also, you need to check reports regularly even if they are delegated to to a bookkeeper. Since you are the business owner, you will be the one who will get assessed interest and penalties especially for missed tax payments. The ATO will chase you for the unpaid taxes.

How to ensure your employees do not commit fraud?

Unfortunately, frauds are discovered when it is too late. The good news is you can limit opportunities for theft with these following steps:

Run a background check on your employees

Anyone can pretend to be a great employee and even fake credentials. Business owners must make it a habit to run a background check before deciding on hiring a bookkeeping. You will never know an employee’s reputation unless you take time to know them.

Delegate tasks and responsibilities

It is difficult to monitor signs of fraud if you delegate responsibilities to one person. Responsibilities must be separated or assigned to different people so you can easily check if there are traces of fraud.

Check transaction history

More often than not, fraud is committed through checks and credit card. These transactions will only be discovered if you check the transaction history. Business owners must take the time to set up automatic payments, review reports, pay bills electronically, avoid signing blank checks and use secure checks.

Monitor payroll, accounts receivable and payable

Aside from monitoring reports, it is also important to monitor accounts receivable, accounts payable and payroll. Accounts receivable refer to open invoices while accounts payable refers to unpaid bills. Payroll must also be monitored such as the deductions, commissions, wages, overtime and timesheets.

It takes time and effort to ensure fraud is kept at bay, but it is even more expensive to let fraud go unnoticed. Aside from penalties and interest, your company may also run the risk of going out of business because of cash flow problems.

Which Bookkeeping Software Is Right For You?

Bookkeeping may not be your top priority because your small business is not as complicated as large and established companies. One mistake that business owners make is taking bookkeeping for granted for the belief that it will not hurt a small business.

However, with the stiff competition going on, no business, regardless of size can remain complacent. If you dread bookkeeping, you no longer have to spend your day working on manual and repetitive tasks. Bookkeeping software will make your daily  life easy. Unfortunately, choosing the right software can be complicated. Narrow down your options by considering the following points.

1. How much are you willing to spend on bookkeeping software?

Before you can explore your options, you will need to analyse your budget. Depending on your business needs, the price will vary from feature to feature.

The more features offered, the more it costs. Avoid choosing software loaded with features if you are not going to use all of them because it will be a complete waste of money. Some software providers offer a free trial or demo so you will know the features you need for your business.

Aside from the features, you will also need to check how you are going to pay for the service. Additional updates may also require an extra fee. Find out if you can purchase packages with a comprehensive pricing structure. For most business, paying a monthly fee is the most preferred payment term.

2. Is it user-friendly?

Not everyone enjoys manual to digital transformation. This is why choosing the best software for your business also involves knowing how to use it. The right software will enable you to learn bookkeeping over a short period of time. You do not have to spend your workweek learning bookkeeping.

The right software helps you track your income and expenses. It will also help you record your daily transaction. If you cannot make smart financial decision, it only means that your software solution is not doing an effective job.

3. Can you access your financial information whenever and wherever?

The digital era makes it easy for business owners to run their business even outside of the office. Flexibility brings convenience and as a small business owner, your software selection should also depend on the application’s ability to give you access to your financial information on your mobile device.

Aside from instant access to your reports, the software should also give you the option to share the information with your bookkeeper and business partners. While applications capable of giving you access to information from any device is a huge advantage, security must also be prioritised. Confidential records must be kept safe and secure. It will be useless to purchase bookkeeping software if it cannot create layers of protection to sensitive data.

Once you provide answers to these questions, the process of choosing bookkeeping software will be a lot easier for you.

Top Four Common Mistakes On Tax Return

A business tax return is best prepared by someone who knows the ins and outs of your business. Hiring an accountant gives you peace of mind when it comes to tackling one of the most challenging tasks of running your business. However, an accountant does not guarantee immunity to mistakes. There are many reasons your business can fail on making a business tax return.

Not taking bookkeeping seriously

Poork bookkeeping has a negative effect on your business as it involves record-keeping. Your company tax return is computed based on your records and when the task is handeed over another bookkeeper who seems to run through everything including making necessary adjustments, things can get really mixed up. For a seasoned bookkeeper, these tasks are just a walk in the part not until tax time. When the ATO knocks on your door, checking your records is one thing that make bookkeeping a tedious task.

Nowadays, bookkeepers no longer spend too much time on reconciling bank accounts, chasing unpaid debts, reviewing reports and others. Cloud services such as Xero allows bookkeepers to deliver accurate reports and ensure that superannuation is paid up. These are simple and basic tasks, but they are the ones that business owners often miss out.

Not paying on time

Tax returns are usually due on May at the end of the financial year. Since your company has all the time in the world to prepare and lodge timely payments, there are still business owners who still lodge late. As a result of late payment, business owners suffer from penalties.

The good news is penalties can be avoided by ensuring that your tax affairs are in order. Having a good process is key to preventing problems associated with your tax returns. It is also imperative that you plan your tax bills in advance.

Taking out personal loans

Cashflow is an important aspect of your business and just because you are the business owner does not mean you can borrow money from your company. Before making any decisions of taking the cash, take tax rules into consideration. Taking money from your company to cover living expenses can impact your business. Speak with your bookkeeper or accountant so you can obtain sound advice and recommendation.

Not paying superannuation

Superannuation brings stress to business owners especially those who do not completely understand how it works. If you are still wondering whether or not you should pay super, checking out ATO’s employee/contractor decision tool will be a huge help. Knowing what you need to pay for will enable you to pay the superannuation on time.

How To Protect Your Business From Fraud?

Small businesses are vulnerable to fraud and because there are too many priorities to think about, the company’s level of security has to take a backseat. Aside from investing in high levels of security, there are also other practices your company should follow to reduce the risk of fraud.  There are many types of fraud that a small business may face. Fortunately, there are ways to avoid or at least minimise them.

Set Boundaries

Shared passwords increase the risk of fraud. Setting clear boundaries decreases the likelihood of fraud. A code of ethics may be difficult to follow for small business owners. If expectations are not properly set, it will be difficult for you and your employees to draw the line. Boundaries do not only protect you against fraud but your employees as well. Putting rigid policies in place will prevent instances in which you say one thing and enforce another. A code of ethics also take you in the right direction in the event matters are taken to court. When you have encountered breach of agreement, the first step you will take is to document it.

Verify Reports and Receipts

A bookkeeper can keep things organised, but this does not mean that you will no longer actively participate in reviewing reports. Being hands-on allows you to prevent oversight. If transactions are not authorised, the reports will clearly show where your business is headed. Deposits, invoicing and even outside audits must be properly verified. In the long run, you will be able to uncover fraud or even prevent it from taking place as your employees are fully aware you are also doing a personal audit.

Perform a Background Check

It is not easy to hire employees especially for small business owners. A basic resume can be peppered with impressive descriptions to win the nod of employers. References are important as it enables you to know a potential employees work ethics. Before you consider hiring an applicant, the conversation must be enough for you to gauge their character. More due diligence is essential if the job requires additional responsibility.

It takes a lot of hardwork to run a small business successfully. Fraudulent transaction is one thing to worry about. There are even businesses that discover fraud when it is already too late. Aside from breaking up essential tasks, setting clear expectations is also important. Violations of polices must not be tolerated so employees know you are serious about implementing stricter rules.

4 Ways To Cut Down Time In Bookkeeping

There is a lot of work involved in starting a business and bookkeeping is one of them. Bookkeeping is essential in making sure that your business runs smoothly. If it takes an extended amount of time to carry out your bookkeeping tasks, there are 4 ways you can reduce the time spent on this task.

Automate Your Payroll System

Manually processing the paychecks of your employee demands a large chunk of your time because you need to make sure that the details are correct. You will also have to print and sign the checks. The hours you spend on payroll processing can be reduced by using automated payroll systems. With automated payroll, you will be able to make time-consuming processes such as printing, signing and approving hours easier. The only tasks you need to do is to approve the payment and checks. It will be beneficial for you and your employees as they get the checks faster and you also get to manage other aspects of your business.

Sign Up For An Online Banking Account

In the digital age, almost all institutions have embraced technology. With that said, creating an online banking account will be more convenient for you to take care of your transactions. Instead of having frequent trips to the bank, you can choose online banking to deposit checks or withdraw funds. With just a few clicks, you will be able to move your money around. Transactions such as paying vendors or issuing refunds will not consume your preciious time. All you have to do is to enable automatic payments in your online banking account and you are good to go. An instant access to your debits, credits and account balances is another benefit you can get from having an online banking account.

Switch to Bookkeeping Software

Reliable bookkeeping software keeps any bookkeeping task to a minimum. Bookkeeping software allows you to record deposits, debits, creating reporting, tracking bank accounts and many others. As the bookkeeping software gives you the ability to reduce manual tasks, it will be easy for you to generate accurate reports. You just need to dedicate regular time to prevent your business from falling too far behind from your obligations.

Separate Personal and Business Finances

It is still surprising that there are still business owners who do not separate accounts. Having separate savings accounts will help you manage your business accounts by accurately tracking how much you are spending for your business. If you have the same personal and business accounts, monitoring your spending habits will be all too confusing. It is also wise to carry a business card and a personal card at all times as you never know when you are going to spend something for your business.

How To Stay Ahead Of Competitors As A Small Business Owner

Even if you are a small business owner, it does not necessarily mean that you have no reason to stay ahead of your competitors. If others have cutthroat instinct for survival, you too should have some strategies that can help you thrive in a competitive business world. Even the best ideas can flop. This is why having a competitive advantage is one way you can pull ahead of your competition. Here are four techniques that can help you outperform competitors.

1. Identify strengths and weaknesses.

Your competitor may have an edge over your products and services, but this does not mean that you cannot emerge victorious. Every company has a weak point and this is something that you can use to outperform them. A company with a great product may have the poorest customer service. Find out what makes your company a better choice. It is also important to consider marketing and presentations. Even your prospective customers should know the importance of these selling points.

2. Keep customers involved.

Your product may be great today, but it can be easily forgotten the next day once they find a better replacement. However, if you are going to ask customers how you can enhance your product,  your competitors will be the last thing for you to worry about.

3. Choose large clients

One reason small business owners should go after larger clients is that they can help you yield better results such as increased revenues and more business. Compared to small companies that may require hand holding, larger clients are easier to service. You can also improve your credibility and even meet potential prospects. If the thought of approaching larger companies intimidates you, think about the long-term benefits you can get such as moving faster and gaining better ideas.

4. Keep track of your financial health

Any profitable business should never remain complacent just because of a good business performance. Your competitors can be like a thief in the night that will steal your position at the drop of a hat. If you are going to allow other businesses to pull ahead of you, growing your business will be a challenge. There is a good reason you have a good bookkeeper and that is to keep track of your financial health. Make sure you are checking your financial statements so you will know if your business is doing well.  Ask your accountant or bookkeeper about some recommendations to improve your business.

Change is also essential to stay on top of your game. This means that if you are still into traditional business process, you need to up your game by embracing technology.

5 Signs You Have A Great Bookkeeper

A business will not be complete without hiring a bookkeeper. In searching for a great bookkeeper, there are some qualifications that must be taken into consideration. Keep in mind that you will be entrusting the most important aspect of your business and an incompetent bookkeeper will not be able to provide sound advice and recommendation.

Aside from training and accreditation, your bookkeeper should also be experienced. It is not easy to monitor your business and a less experienced and less qualified bookkeeper will not help you accomplish your financial and business goals.

If you have been keeping a bookkeeper for quite a long time, here are some signs that you have hired a great one:

1. They completely understand the process.

A bookkeeper who knows the ins and outs of your business will understand how it works. Being able to understand your process enables bookkeepers to find the best solution possible to ensure that your business will become successful in the end. A bookkeeper who has the ability to understand the process will see the areas of your business that you can streamline.

2. They ask questions.

Some business owners may not entertain questions as they find it annoying. However, bookkeepers want to ensure that every transaction made is correctly allocated. This is why a bookkeeper who really cares for your business will ask questions instead of simply guessing which direction your business is going to take. A business owner may assume that everything is going fine, but upon inspection, you will realise that the figures are not correct.

3. They know their scope.

The accountant’s job differs from the bookkeeper’s. A great bookkeeper knows what they should do and they will even collaborate with the accountant to gain the best solution so your business will have a healthy financial state.

4. They do their homework.

Business strategies need to change as technology changes. Since trends come and go, bookkeepers should take the initiative to keep up with the changes. These days, cloud technology is one way to make every transaction easy and hassle-free. A reliable and trusted bookkeeper should know when to make the switch. A business owner may not easily agree to the changes, but explaining how the transformation will create a positive impact on the business will make a difference in convincing the business owner.

5. They can be trusted.

It is not easy to hire a trusted bookkeepers these days. Some business owners are not comfortable sharing their financial details with their friends or even family. A bookkeeper should know how to keep confidential information private.