The Benefits Of An External Audit For Your Small Business
A lot of small business owners are afraid of audits. However, an external audit might not be a bad thing for you. Here is what you need to know about an external audit and how you can actually benefit from having one.
What Is An External Audit?
It refers to the inspection of your company accounts such as the invoices, accounting systems and documents. The objective of an audit is to identify whether the financial statements represent the accurate and proper view of your company. There are IRS audits or you can hire an independent auditor for the best results.
How Can Your Small Business Benefit From An Audit?
When the external audit is completed, there’s a chance that it will uncover a lot of things you might not know about your business. Here are some of the benefits of doing an audit.
- An audit will reveal if there are any weaknesses our outstanding problems with your current accounting system. If there are, you can make the necessary improvements that will eliminate them completely. For instance, you might not be tracking a few transactions correctly or there might be payments that need to be corrected. If these and more issues are identified you will change the errors immediately.
- If there has been or there is ongoing fraud, an audit should help uncover it. For instance, if there are employees or managers who are stealing finances from the company, the auditor will notice the discrepancies and allow you to eliminate the problem before it becomes crippling.
- Another benefit of an external audit is that it will improve your tax planning strategies. That way, your business is prepared for tax season. Additionally, you will get a chance to leverage tax write-offs or any other benefits accordingly. If you’re planning for your taxes beforehand, you will not be stressed when tax season comes around.
- Also, the audit should identify any ongoing poor accounting practices. For instance, some employees might not be tracking the financial expenses correctly thus causing more problems in your books than expected. Note that, you might have a hard time identifying these issues unless you check the overall picture.
- Finally, an audit should improve the credibility of your financial records especially if you are planning to sell in a few years. If you have kept proper records over the years, it should be easy to determine your current financial standing.
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