As a small business owner, assessing your financials is a crucial task. Performing a self-audit will ensure you stay on top of your cash flow, expenses, and income, thus preventing costly penalties from the IRS brought on by oversights. The following guide offers a helpful starting point to ensure your business development continues without any unexpected issues.

3 Steps to Conduct a Business Self-Audit

1. Evaluate Your Current Cash Flow

Designate some time to focus specifically on the details and numbers associated with your audit. This will help prevent any mistakes or oversight.

During this time, look at the amount of all revenues on credit as well as the turnover ratio, otherwise known as the length of time needed for this credit to translate to cash. Examine these figures side by side to evaluate your business’ expenses, including any payments to suppliers—this will provide a full-scale, long-term view of liquidity.

2. Review Your Expenses

Even the smallest expenses can stack up to have a meaningful impact on your business’s financials. Evaluate all company spending, including supplier costs, service contracts, and operational expenses.

Next, calculate them so that they represent percentages of your revenue. For those expenses that are putting a significant dent in your financials, consider dropping them or looking for more cost-effective alternatives; bear in mind, though, that you should never sacrifice product or service quality for better prices.

3. Check Income Records

Maintaining a separate, unique bank account for all your business dealings is crucial, as it allows you to monitor company revenues and expenses independent of your personal finances. Traditionally, IRS audits focus on reported income, so keep all income reports well-organized to prevent under- or overreporting. 

If you’re seeking additional help with business development, turn to South Fulton Chamber of Commerce. Based in Union City, GA, and serving entrepreneurs throughout southern Fulton County, they’re proud to offer extensive networking and community engagement opportunities that foster impressive business development and outreach. Call (770) 964-1984 or visit them online to learn about how you can join.