When you own a small business, you need to have a thorough understanding of where your money is going and what's being done with it. Your company's accounting procedures are essential for this, but only if you know that everything is accurate. To ensure the integrity of your accounting data and financial statements, you need to have solid controls in place from the beginning. Here's a look at some of the things you need to do to protect your company's financial records and accounting information.

Establish Cash Handling Regulations

Cash is king when it comes to accounting mistakes and vulnerabilities. As a result, your first priority in establishing accounting controls should be to implement regulations that protect the company's cash. Start by identifying a restricted list of employees who will have access to the company's cash for petty cash distribution, cash deposits, and other necessities. You should also set up a schedule for cash deposits so that you eliminate any guesswork about when the deposits need to be made.

Make sure that your cash is secure at all times, from receipt to deposit. Establish some solid identification processes and activity logs so that you know which employees have accessed cash and when. This way, there's never any question about who was in the cash reserves. And require your signature or the signature of another partner any time cash distributions occur, including for payroll or accounts payable.

Keep Your Cash Handling and Accounting Staff Separate

Always keep the staff doing the accounting and financial reporting separate from the staff that handles the cash in your business. This ensures that there is no overlap in the processes that could give any employee access to funds without sufficient authorization.

Have different employees taking cash at the register and making the daily deposits. That way, you have two different employees counting the cash so that you can ensure accuracy. And have employees who sign off on order receipts and different employees who actually place the order. By creating an even distribution of responsibility, you're establishing a solid system of checks and balances.

Schedule Periodic Audits and CPA Consults

Your company's accounts should be evaluated by an external auditor at least once a year. If you have a certified public accountant (CPA) that you can work with, he or she may do an audit every quarter during an evaluation of the financial statements. You'll have to provide your CPA with access to the accounting system and all of your paperwork, including receipts, cash logs and other details.

If you want your business to have the best chance at success, you need to be proactive about protecting your cash. With these tips, you can ensure that your cash flow is secure. To contact a local CPA, consider contacting a company such as Kamphaus Henning & Hood.

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