External audits can be daunting and may seem like more trouble for your business, but there are some benefits to consider. Having an external audit can improve your business performance in a number of ways, but also protect your business. This is even more important if you are experiencing a lot of growth. During periods of growth, it can be hard to keep all of your financials in check. If you have been considering an external audit for your business, you should know why it is important. It can save you both time and money in the future. Here are some of the ways an external audit can be good for your business.
Prepare For An Audit by the IRS
Having an external audit done by an independent CPA can help you in the case that you are audited by the IRS. Not only can you present the finding of the report to the IRS, but it makes the process simpler. You can be chosen at any time randomly to have an audit performed by the IRS. However, even if you are not chosen for an audit, an external audit will help come tax season. Since all of your financials should be laid out in the report you should be able to file your taxes easily. You save money by not wasting your accountant’s time, and this can greatly benefit small businesses.
Improve Trust With Investors
If you are looking for a way to garner support for the direction of your company, an external audit can help. It tells the investor that you are looking for ways to improve the business as well as cutting out excess waste. This report can also give you leverage in showing how you have progressed year to year. It’s also a good tool to use when trying to win over new investors. You can show not only financial statements but you are also meeting all regulatory requirements. This is a great way for small businesses to manage their finances. Just make sure to let your investors know that you are planning an external audit for an objective view.
Catch Employee Theft
Remember when we talked about the importance of an external audit when experiencing growth? If you are a small business experiencing growth for the first time, you may be hiring more people to meet the demands. Due to that, you may not be able to properly supervise every decision made by your employees. This is a period that can be rife with employee theft, especially if you take most payments in cash. Hiring someone to perform an external audit can help you save money, but also protect you if you are selected for an audit by the IRS. This is something you will want to repeatedly do and especially if you are a large company. Large companies provide unique challenges that only an experienced CPA can solve.
Objective View on Finances
Having an external audit gives you an objective view of your finances that year. It can help you plan to make improvements or where you need to set your goals. Having detailed information on where your assets are and how they are being used is only going to help your business succeed. Not only that, but you can improve efficiency in your business. You can base your decisions on what matters the most and how you can improve cash flow.
Looking to perform an external audit of your company? Sheffield, Trackwell & Rapp, LLC will take a personal approach to your finances, meeting one on one with clients. Contact us today and see how we can help your business.
