Small companies get additional time for reporting benefits
The IRS has just announced that small companies will get an additional year before being required to report the value of employee health benefits on their employees' W-2 forms.
Health reform legislation passed in 2010 included a requirement that employers report on W-2 forms the value of health coverage they provide to employees. The IRS had already provided relief for all businesses by making reporting optional for 2011 W-2 forms.
Now, small companies that file fewer than 250 W-2s need not report the value of benefits until filing 2012 W-2 forms early in 2013.
Why it's important to keep an eye on your company's cash
Do you regularly monitor your company's cash accounts? You should. Even if you leave the job to your bookkeeper or accountant, you should stay aware of where the cash is going and how the spending is approved. Along with inventory "shrinkage," theft or improper expenditures of cash are among the chief sources of loss for small companies.
Periodically, you hear about a huge loss caused by an employee who's been quietly embezzling cash for years. But many smaller cases are never noticed. And it's not always employees at fault. In fact, the vast majority of employees are scrupulously honest and loyal. Outsiders can be stealing your cash too, by submitting false or inflated invoices that are paid without proper review.
How to reduce risk of loss
What can you do to reduce the risk of losses? The textbook answer is "internal controls." This refers to things such as standard procedures for approving and paying bills. It includes segregation of duties - having more than one person involved in preparing, signing, and reconciling checks. Unfortunately, many small companies don't implement proper controls - either because there's not enough staff or because they think it's too much trouble.
Regardless of the size of your business, here are some steps you can take:
* Maintain a strict rule that all invoices must have an approval signature before being paid. Nothing focuses a person's mind like having to sign his or her name on something.
* Have a policy that all employee expense reports must be signed off by a higher-level employee.
* Make it a rule that the person who prepares a company check can't sign that check.
* Ask your bookkeeper or accountant to give you a signed note each month affirming that the bank statement has been reviewed and balanced.
* Follow up personally to make sure that these procedures are being followed.
* Every few months, ask to see the bank statement and canceled checks for the prior month. Review them in detail. Not only will this increase your chances of spotting fraud, but it will also remind you just what the company's cash is being spent on. The owner/manager's review of the bank statement puts a bookkeeper on notice that the boss is keeping an eye on transactions.
Please contact our office by phone at 408-879-9990 or by email at cpa@cpasllp.com for details or for assistance in improving controls over your company's cash. You can also visit our website www.cpasllp.com for more details.
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