How To Perform An Audit For Your Small Business

Are you a small business owner who is looking to make sure your books are in order? If so, performing an audit may be the right step for you. An audit can help you identify any areas of your business that need improvement and can ensure that your finances are in good shape. Here’s a look at how to perform an audit for your small business. 

What Is Auditing?

Auditing is the process of assessing and verifying the financial information of a company. It helps identify discrepancies and irregularities in the data so that they can be corrected. Small businesses can benefit from audits by ensuring their financials are accurate and by uncovering potential problems and errors early on. 

The goal of auditing is to improve the accuracy and reliability of financial statements, as well as evaluate the financial health of a business.

1. Online And Offline Advertising

One of the most important things you can do is to know how much money you are spending on advertising and where that money is going. You can have a pretty good idea by looking at your credit card statements, but if you don’t have a good handle on what is being spent, it will be difficult to track down any fraud or errors in billing.

2. Cash Handling

Cash handling for small businesses can be a major problem area for fraud. Employees may short-change customers or steal cash from the register at the end of the day. There are ways to prevent this from happening though. 

You should make sure that all employees count out their drawer at the end of every shift and then compare it with their cash register total before they leave for the night. If there is a discrepancy, you should investigate why it happened because it could mean theft by an employee or customer. 

The best way to prevent this type of theft is to use POS software that does not allow employees to enter amounts below the cost price when ringing up sales. This way they cannot short-change customers without being caught by management who has access to real-time reports showing all transactions run through the POS system.

3. Purchases Made On Your Credit Cards Or Debit Cards

It’s important that you monitor your credit card statements so that you can identify fraudulent purchases made using your cards as soon as possible after they occur so that you can contact your credit card company and dispute them right away before they become part of your balance due on your next statement.

As it would make them much harder to dispute successfully later on when they are actually posted as charges on your account (which usually takes about 30 days). 

It’s also important that you keep an eye on your debit card activity so that if someone uses one of those cards for fraud, it doesn’t cause problems for you with overdraft fees or other problems caused by having too little money in those accounts at any given time (which could happen if someone stole funds from one of those accounts).

4. Employee Payroll Records

Employee pay records are another area where fraud can occur in small businesses. You should make sure that you have a record of the hours worked and the pay rate for each employee, and that you are paying them at least minimum wage for every hour they work. 

If an employee is working more than 40 hours per week, it’s important to make sure that they are not being paid less than minimum wage after 40 hours per week so that you don’t get hit with fines from the government or lawsuits from employees who feel they have been cheated out of their rightful wages. 

It’s also important to keep track of things like vacation time and other benefits which may be earned over time by employees as well as any expenses incurred by your business on behalf of your employees like mileage reimbursements or meals provided at company meetings or conferences. 

This way if there is a problem later on with an audit or investigation into your business, you will be able to back up everything you have done for your employees with documented proof.

If you want to keep your small business safe from fraud, it’s important that you take the time to perform regular audits of your business and make sure that everything is being done correctly. If you don’t do this, then it will be much harder to catch problems with fraud before they get out of control and cause major problems for your business.

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