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Business owners may be at significant risk of being defrauded in their company and not the not says part-time CFO. Many small businesses donít have staff large enough to have two people working on financial files within their business, or business owners may not understand why this is important. By not being aware of the risks, business owners are powerless to guard their companies and themselves against fraud. By being aware of all the various risks, business owners can take the necessary steps to protect their business.
One of the more common ways that businesses can get defrauded is through fraudulent payroll transactions. There are several ways that dishonest employees can achieve this, and by being aware of all the various ways that it can happen, business owners can take necessary action against it. The first way that payroll employees have defrauded their company is by increasing other their wages per hour for the number of hours that they work. Often when employees do this, they will little bits of money over a long period of time. It doesnít arouse suspicion, because theyíre not stealing a lot of money all at once. Employees who defraud in this way, are playing a long game, hoping to steal a lot of money over a very long period of time. If left unchecked, businesses can be out tens of thousands of dollars if not more.
Another way that payroll employees can steal from a company is by using payroll remittances. How they do this says part-time CFO is that the make a lump sum payment to CRA for all the payroll remittances due, however they pay too much remittances on their own file. At the end of the year when taxes are being done, CRA will see that they have received too many payroll remittances for that person, and send back a refund check. Unfortunately for the business owner, this refund check goes to the employee and not the employer. They can steal hundreds if not thousands of dollars if they do this over a long period of time. This is extremely hard for a business owner to catch simply because they see that there is a lump sum payment of remittances being paid, and they will assume itís all correct. Business owners can avoid this by working out all of the CRA calculations themselves and double checking against the amounts that should have been paid.
The third way that a dishonest employee could defraud the company is by using a dummy corporation. The way they do this is part-time CFO is make a payment to corporation that doesnít exist. They cash the check and pocket the money, and the business owner a review all of the payments and see that payments are all being made to legitimate sounding companies and donít raise a red flag. Business owners could guard against this by reviewing every single check that is out to make sure that it matches legitimate payment.
These are all the different ways that businesses to be defrauded through payroll, and they can either have a second person working on the payroll to avoid having one person acting fraudulent activities, or business owner could also outsource payroll to 1/3 party company. This is a simple way they can completely eliminate all these various ways they could be defrauded to payroll.
Entrepreneurs often only have one person in charge of their accounting in their company says part-time CFO. This carries significant risk to the business, because without having a second person that is working on it alongside them, or double checking their work, we could be committing fraud and stealing money from the company, and the business owner would never know it. Often business fraud can happen over many years and not the caught. Entrepreneurs can significantly reduce fraudulent risks and in some cases completely eliminate them. By knowing all the different ways they could be defrauded, entrepreneurs can take steps to protect them in their business.
One of the ways that business owners can be defrauded is when employees are in charge of making small purchases within the business. One of the most common ways of doing this says part time CFO is through stealing money from petty cash. Dishonest employees either steal money directly from petty cash, or purchases that are unnecessary for the business with that money. This is completely avoidable risk if business owners completely eliminate petty cash in their business. There is no reason that any businesses need to have cash on hand anymore, most of the purchases that business would need to be made can either be made electronically if a business owner canít send a check or electronic payment. By eliminating the petty cash fund, business owners are not only guarding themselves hundred percent against petty cash fraud, we are also protecting themselves against getting audited on that petty cash fund.
Many business owners who eliminate that petty cash have a company credit card that all of the employees use to make those necessary purchases that was done by petty cash previously. Part-time CFO says that this is a bad idea, because a shared credit cards with an office makes it very hard for business owner to keep track of which employee made what purchase, and if a fraudulent charge ever does happen on the credit card it may be difficult or even impossible for a business owner to know who made that fraudulent charge. If a business owner does need to have a credit card issued to an employee, they should ensure that only one credit card is issued to each employee, and that they are responsible for keeping the credit card credentials themselves. That way if a fraudulent charge appears, a business owner knows exactly who is responsible for its.
A much better option to having credit cards in the business is part-time CFO is company debit cards. They can lock the card and put a daily limit on it so that employees cannot make online purchases and also cannot make huge purchases either. If someone makes a fraudulent charge on the debit card, the business owner is only out hundreds of dollars and not thousands.
