Updated: Sep 12, 2022
Do you even know or care about internal controls when you are trying to run a small business? Accountants love them, and you need them. What are internal controls anyway?
Internal controls are used to ensure you've got reliable financial reporting and operations. In short, they are processes put in place to put an extra set of eyes on your transactions to make sure you have what you report (no fraud) and are doing things the most efficient way possible. Sounds great, but who has time?
You do - or you better. For a small business, you don't necessarily have an extra set of eyes and you don't have a lot of time to slick up processes when you're going from one job to the next. As an owner, here are a couple things you can do.
Keep personal and business finances separate. Open a business checking account and have a separate business credit card.
Do a monthly bank reconciliation. Review the bank statements carefully each month. Get in the habit of doing a monthly bank reconciliation and use the bank's website to monitor all cash transactions.
Approve or sign all outgoing payments. This takes some time, but you need to know where all the money is going. Don't just trust someone to do the right thing because you hired them.
Monitor credit card charges closely. Even better, don't have company credit cards for employees other than you.
These are a couple simple things you can do that will make a big difference in how you control the finances in your business. NexTier Solutions can help review your controls and even be the extra set of eyes you need to efficiently run your business.