Even more important than keeping all your paper under control is setting up an internal accounting control system that helps you avoid loss. If you are running the business as a sole proprietor and handling all the funds yourself, you don’t need internal controls. (Unless, of course, you don’t trust yourself.) Otherwise, you should carefully design your accounting system as a deterrent for fraud and embezzlement. A dishonest person can find a way around almost any system, but a good internal control system keeps honest people honest.
Without good controls in place, a small business risks the following:
• Unauthorized use of assets
• Inaccurate reporting of transactions
• Loss or theft of key documents
• False entries into ...