5 Ways to Protect Your Small Business from Fraud

Companies with less than 100 employees claimed a median loss of $150,000 as a result of fraud during 2016, according to the Association of Certified Fraud Examiners.

Here are some tips to protect your small business from common frauds:

  1. Protect your IT infrastructure by instituting strict access and password policies.
  2. Control the credit cards and bank accounts usage by using dedicated computers for online banking with multiple layers of security.
  3. Educating your staff with basic training that can guide them to handle confidential information is also vital. The frequency of training should depend on the traffic of the new hires.
  4. Consider expert help from CPA’s or CFE’s who can help you structure anti-fraud policies and periodic audits.
  5. Finally, make sure you are insured so you know you will be covered in case of a fraud.

 

We understand that it is very important to protect your small business because it is YOUR small business. There are obviously plenty of ways to help protect yourself from fraud. If you would like to find out more, you may find the link  and corresponding information below interesting!

http://www.acfe.com/fraud-prevention-checkup.aspx

Employees VS Independent Contractors

Perhaps you have not thought about the differences between an independent contractor and an employee. Oftentimes, independent contractors and employees work in tandem with each other at the same company, doing alike tasks. The similarities stop there due to the very important legal guidelines for each type of work status.

Determining Independent Contractor vs. Employee

The primary rules of thumb to follow in determining if someone is an independent contractor are the level of control an employer has over the services or products, how the individual is paid, and who supplies the equipment, material, and tools. The nature of the work can also help to define the relationship. If the work is considered integral to the function of the business, more than likely the individual is considered an employee of the company, and is regularly paid as such. If the work is temporary or intermittent and not considered integral to the function of the business, it may signify the individual is considered an independent contractor.

Employer Tax Liability

The individuals’ employment status will determine the employer’s tax liability. If the individual is considered an employee, the employers are required to pay workers compensation/disability premiums, Social Security and Medicare tax, and federal and state unemployment taxes. If the individual qualifies as an independent contractor, the “employer” is not liable for any of these payments.

Misclassification

If a company incorrectly classifies an individual as an independent contractor, instead of an employee, there is a range of costly legal consequences. As the owner of the company, you may be required to reimburse the individual for any wages you should have initially paid them under the Fair Labor Standards Act, provide the employee with benefits such as health insurance and retirement plans, and pay back taxes and penalties for federal and state income taxes, Social Security, Medicare and unemployment. The Internal Revenue Service can be alerted to the suspected tax fraud and the U.S. Department of Labor Wage and Hour Division can be alerted to the pay violations.

 

The rules relating to the proper classification are fairly complex. Please call Travis Thomas at 314-576-1350 or email at tthomas@bwtpcpa.com.

Securing Your Financial Information

Are you worried about getting your identity stolen? Are you doing everything you can to make sure that your financial information is safe?

As your accountant, BWTP P.C. takes every precaution to ensure the safety of your financial information. Even the most strict security procedures cannot prevent all instances of identity theft, mainly because the majority of the vulnerability lies with you.

Here are some quick tips that will assist you in the prevention of identity theft:

Always Use Secured Networks When Accessing Financial Information

Logging into your bank account over a local coffee shop’s Wi-Fi is not recommended. These hotspots have lowered the security to make it easier to access the connection without much trouble. Consequentially, this gives the opportunity to individuals that can access your connection. Encrypted wireless networks or your mobile carrier network are recommended instead of unsecured networks.

Be Aware of Exactly What You’re Downloading

Take precautions on what information you download. Free software and files from an unknown source should be avoided. These programs and files can contain malicious software that can access your other files on your computer. This spyware, after being installed and run, can access your sensitive information and relay it to the host site. Download from trusted sources and making sure you have current anti-spyware software will help prevent these intrusions.

Do Not Fall for the Convincing Email Phishing

“Phishing” is the activity of defrauding an online account holder by posing as a legitimate company. Most of the time it is easy to spot a phony email trying to get pieces of sensitive information. Be wary of what institution the emails are coming from. Typically, no financial institution will ever ask for a PIN, password, or other sensitive information through email. Take the 30 seconds to research the sending if there is any suspicion. Also note, the IRS will always mail you a letter, they will NEVER contact you first through email or by phone.

Keep Your Passwords Secret and Make Them Strong

Do not keep your passwords stored on your computer and make sure they are strong and kept safe. If it is necessary to write the passwords down, keep them in a secure, private location. Using a combination of letters, numbers and symbols will also increase the security of your information. Avoid using easily-guessed information or details about yourself for passwords and PINs.

Be Sure to Shred

When disposing of any financial information, shredding the documents to avoid the dumpster-divers can be an easy deterrent. On top of being wary of emails and phishing, old-school dumpster-diving is still a threat today. Shred any documents that you are getting rid of to add another layer of security for your private information.

 

Please do not hesitate to call Clint Carder at (314) 576-1350 if you have any questions or concerns about the security of your financial information.

Embezzlement Detection For Your Dental Practice

Embezzlement in a dental practice is becoming more and more common.  Sadly, about 80% of dentists will encounter some form of theft or embezzlement over the course of their career.  The problem is most disappointing when it’s a trusted associate or even a family member who does the unthinkable.  Here are a few ways to protect & detect embezzlement in your dental practice:

1.  Rigorous New Employee Screening

Hiring practices can make all the difference in your dental practice.  Filling your staff roster with family and friends can be tempting, but not always prudent.  Typically we don’t scrutinize someone we’ve known for a long time or “like” as rigorously as we would a stranger.  Don’t let that be the case!  Whomever you decide to hire, always think of them being trusted with your most valuable assets and information.  Because… they ARE being trusted with exactly that!  Screen a new employee on the basis of a credit report and criminal background check.  References from previous employers are also requisite to ensure you know who you’re bringing on.

2.  Workflow Separation

Do not have one single employee at the helm of all your practice’s finances.  This amplifies internal theft chances by a staggering margin.  Separate your workflows and allow your staff to review each other’s work.  Checks and balances are always going to be your friend.  Give each associate access to a certain portion of the practice finances and have each verify and confirm their work.

3.  Warning Sign To Watch For

While signs of embezzlement aren’t always there, it’s important to keep an eye out for trends and behaviors that usually follow internal theft.  The most common signs include:

  • An associate who appears to spend beyond their means.
  • An eagerness to always be the first at work, the last to leave, or someone always trying to be alone in the office.
  • Accounting practices or questions that don’t get answers.
  • Acting territorial or highly protective of the work they do with practice finances.

4.  Regular CPA Reviews

Two sets of eyes are traditionally better than one.  Regular reviews of your practice finances with a dental CPA can save you thousands of dollars in theft, legal fees, etc.  A regular audit with a professional CPA can assist you in spotting irregularities more quickly and may act as a safeguard against your staff “trying anything”.  If they know you regularly review your books with a CPA, they may think twice about trying to skim funds from your practice bank accounts.

Are you curious what BWTP PC can do for you?  Call our office today and schedule a consultation with one of our accountants!