4 Ways that Auditing Your Business Yourself Can Help Your Company
If you run a business, you might get nervous when you hear someone say the word “audit.” The term often brings to mind a team of IRS agents going through your books with a fine-tooth comb, looking for any irregularities. That can indeed happen sometimes, but not if you keep careful track of the money you bring in and your expenditures and when you report those to the authorities.
However, even if the IRS never audits you, it’s sometimes not a bad idea to have your accountant or accounting department audit your company themselves. Several ways doing this can assist your business, so let’s talk about those right now.
When following a guide to company audits, conducting internal audits can save on external audit costs and empower business owners and managers with valuable insights into their operations, helping them make informed decisions for growth and compliance.
You Can Discover Any Fraudulent Activity That’s Happening
You might look into a traditional audit if you decide to put your own company through it, or you could talk to an accountant about what they call an audit transformation. This is a new way of auditing a company that uses cloud-based resources and the latest technology. Whatever you decide, though, discovering any fraudulent activity is one of the primary reasons for doing it.
Your workers might attempt several kinds of fraud if you are not paying close attention to. For instance, maybe there is payroll fraud going on. Some of your employees might seek payment for more hours than they worked.
You might not go into the audit thinking that you’re going to use it to uncover fraud, but that may end up being one of the side effects. If you detect any financial irregularities, you can take action to alleviate the problem.
If you have to fire anyone, it will not be pleasant, but you can run a tighter ship from that point forward. Also, this is a way you can demonstrate to others who have similar ideas that you’re not going to tolerate their behavior.
You have to work with the IRS if you run a business. They want the money due to them at the fiscal year’s end, and if they don’t get it, they can hit you with all kinds of penalties. If you audit yourself, you will be in a better position to work with the IRS. This is how you can get your tax statements ready when tax time comes more accurately than they would otherwise be.
You may save some money on your CPA bill if you have your taxes ready to go considerably before the deadline. You can probably take this extra time to identify the possible write-offs that you can legally take when the time comes.
Auditing Business Yourself: You Can Tweak Your Productivity Levels
You always want to think that your workers are as productive as possible. A self-audit can often reveal ways to fix any operating inefficiencies or increase your profit margin. That counts for a lot in whatever stage your company finds itself. If you can shave money off your operations budget, you can then allocate it wherever else you most need it to go.
You can think about a self-audit as a way of doing quality control. It will reveal whether your financial activities are moving along as they should and whether your internal operations are as streamlined as possible.
Remember that any audit will look at your business’s core processes. If there are any unnecessary steps or redundancies that you need to address, an audit should bring those to light so you can make the necessary changes.
At some point, you might need to try to obtain more funding for your business. You might approach a venture capital firm, or maybe you feel like going to a bank or a credit union for a loan makes the most sense.
Obtaining funding is not exactly the easiest thing in the world, though. Regardless of whether you’re standing in front of a bank’s loan officer or you’re on a conference call with a venture capital firm, you should expect them to ask you some pointed questions about your company’s overall health and viability.
You can give them up-to-date, honest answers if you do a self-audit. If you can point to specific facts and figures at this juncture, the chances are much higher than you can walk away with a fresh cash infusion to expand into new markets. The more you reflect on it, the more a self-audit makes sense.