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The word “audit” can be daunting to a small company, as many people associate the word with a letter from the IRS. However, accounting audits are actually very helpful for businesses of all sizes. Continue reading for a few tips on when to conduct an internal audit in your business.
Before Asking For Investments
Before asking others to invest in your company, it’s crucial to perform an internal audit and a full review of your financial statements. It is very unlikely that an investor will want to work with you if they find something inaccurate, as they may believe you were trying to hide something from them. Before speaking to any investors, take the time to prepare formal financial statements for them to look over. Be sure to double check all of the information to ensure it matches the data used to prepare your statements.
After Noticing A Mistake In The Books
At the end of each month, you may be used to seeing that an account has a little more or a little less money than you were expecting. Rather than just writing it off, it’s important to investigate and find out why the account is off. After all, math is an exact science, so the numbers should always add up correctly! When looking back through the journals you keep, you may find that two numbers were transposed, or you may find that there is a weakness in a process that is causing employees to make errors.
When Profits Are Declining
Profit or cash flow declines are typically blamed on market conditions, but there may be other issues involved. For example, it’s possible that your profits are declining if your company is not paying enough attention to accounts receivable. Even if there was an outside cause for the cash flow decline, it’s always helpful to look for ways to improve with an internal audit.
On A Regular Schedule
While there are certain situations where an internal audit is necessary, it is also essential to schedule audits regularly throughout the year. By sticking to a schedule, audits can help detect potential issues in your business before they turn into larger problems. Every company’s main goal is to turn a profit, and checking up on your financial situation is just as crucial as ensuring high-quality products and great customer service.
Trust The Professionals At The Harding Group
Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, Google+, YouTube, and LinkedIn.