As a business owner, you know that keeping your finances is essential. It is crucial for tax purposes, and it can help you keep track of your company’s progress and make sound financial decisions. Unfortunately, even the most careful business owners can experience financial troubles if they’re not careful. However, by taking some simple precautions, you can minimize the risks and help to protect your business. Here are six tips on how to keep company finances safe:
1. Keep Your Books Up to Date
This may seem obvious, but it is vital to keep your financial records up to date; this includes recording all transactions, reconciling bank statements, and preparing financial statements regularly. Doing so will help you catch any errors or discrepancies early on and prevent them from snowballing into larger problems. Furthermore, keeping your books up to date will give you a clear picture of your company’s financial health, which is essential for making sound decisions about its future. If you’re not comfortable handling your finances yourself, plenty of accounting and bookkeeping services can do it for you.
2. Use FINRA
The Financial Industry Regulatory Authority (FINRA) is a non-profit organization that regulates the securities industry in the United States. To protect investors, FINRA strives to maintain fair and orderly markets and safeguard market participants from fraudulent and abusive practices.
To achieve these goals, FINRA enforces rules and regulations governing the conduct of broker-dealers and registered representatives and provides investor education and outreach. If you are interested, you can learn more at https://www.erezlaw.com/finra-arbitration/ about filling FINRA. In addition, FINRA conducts regular examinations of broker-dealers to ensure compliance with its rules and regulations.
3. Implement Strong Internal Controls
One of the best ways to protect your company’s finances is by implementing strong internal controls. Internal controls are procedures and policies designed to safeguard assets, ensure accuracy and completeness of financial statements, and prevent fraud. Common internal controls include segregation of duties, physical security measures, and background checks for employees handling sensitive information. While no system of internal controls can eliminate the risk of fraud or mismanagement, having solid controls in place will help deter and detect wrongdoing.
If you’re not sure where to start, many resources are available to help you develop and implement internal controls. The Committee of Sponsoring Organizations of the Treadway Commission (COSO) offers a framework for internal control that organizations of all sizes can use. The U.S. Small Business Administration also provides resources for developing internal controls.
4. Protect Information Security
In today’s digital world, protecting your company’s information is essential to safeguarding its finances. Hackers and cybercriminals are constantly looking for ways to gain access to sensitive data, so it’s vital to take steps to protect your information from unauthorized access. Some simple measures you can take include:
* Encrypting sensitive data
* Using strong passwords
* Restricting data access
You should also be aware of the dangers of phishing scams. Phishing is a type of cyber attack in which criminals attempt to trick victims into revealing sensitive information, such as passwords or credit card numbers. Be sure to educate your employees about how to spot and avoid phishing attacks.
5. Have Proper Insurance Coverage
No matter how big or small, any business is at risk of being sued. A lawsuit can come from anywhere, whether it’s a customer who slips and falls in your store or an employee who alleges wrongful termination. Having proper insurance coverage is essential to protecting your company from the financial devastation resulting from a lawsuit.
There are many different types of business insurance, so consult with an insurance agent to determine what coverage is right for your company. You can also learn more about business insurance by visiting the website of the National Association of Insurance Commissioners. Common business insurance types include general liability, property damage, product liability, and workers’ compensation.
While having insurance can’t prevent a lawsuit from being filed against your company, it can help to minimize the financial impact if you are sued. When shopping for insurance, compare rates and coverage from multiple insurers to get the best protection for your business.
6. Develop a Risk Management Plan
Risk management is identifying, assessing, and controlling risks to your company. It’s essential to have a risk management plan to help you deal with potential threats to your business. This plan should identify the types of risks you face and the steps you will take to avoid or mitigate them. Your risk management plan should be reviewed and updated regularly, as your risks can change over time. Be sure to involve your employees in the risk management process, as they may be able to identify risks that you have not considered.
There are many steps you can take to protect your company’s finances. By following the above tips, you can help ensure your business’s financial stability.