Updated: Sep 30
If you have hired someone to take care of your books, which you should, make sure you always know what that person is doing.
A wise business owner sits down with the bookkeeper on a routine basis and goes through the monthly financials, including a close look at disbursements. The last routine office duty an owner should give up is approving and signing checks. When giving up that duty, the owner must be confident that the person who takes over can be trusted.
In my previous story about the company with past-due taxes, the gentleman whose company we purchased had an employee whom he thought he could trust. She had been with him the entire twenty years he operated his business. She was a family friend. She even babysit his kids! When I dug even deeper into his books, I learned that the corporation’s income taxes had not been filed for multiple years. I found several corporate credit cards that the owner was not aware of, on which she had charged tens of thousands of dollars in personal expenses. It’s hard to believe that someone who owns a company could be this out of touch. But believe me—it happens.
Business owners want to be out there building their businesses. The typical entrepreneur did not start his company so he could manage the company books on the weekend. But this is the necessary evil that comes with being your own boss. If looking at financials make you want to stick an ice pick in your eye, then pay a few hundred to a thousand dollars to get a neutral party to look behind your bookkeeper. You may save a lot of money in the long run.