Ways to avoid becoming a victim of business financial fraud

According to the Experian recent report, the amount of financial fraud in small businesses has rapidly increased up to 33%. And it mostly relates to businesses dealing with finances on a daily basis, like accounting business. 

At each stage of business development, accounting companies expect numerous pitfalls and challenges. When you only start a business, you may not have enough experience to properly dilute your finances, and evaluate inner processes, efforts, and their correlation to your revenue. When your business grows to medium, the number of daily tasks, employees, and customers are growing. Thus, your company deals with a huge amount of information and numbers that can easily be confused and stolen. The same problems happen when your accounting business grows into an enterprise, but they become much more scalable. 

From our point of view, it is essential to find the best approach to manage and secure your finances to prevent and avoid financial fraud for your accounting business. Hence, we will provide several workable methods that will help your company never become a victim of business financial fraud. 

Select your partners and employees properly

Along with hiring employees for providing financial services for your customers, commonly accounting businesses partner with various organizations and specialists that help them with different questions and concerns. These are lawyers, investment advisors, insurance companies, tax managers, and so on. Before signing contracts and providing new employees and partners with secure financial information about your customers and your firm, ensure that their intentions are sincere and transparent. There are lots of cases when the closest workers and partners betray and hide the financial fraud schemes from business owners or C-level officers.

 As for employees, the recommendations from their previous places of work are a must as the financial sphere is very vital to your business’s success as well as your clients. As for new partners, you can ask for suggestions from your close friends in business or examine the reviews of other companies on website ratings these partners cooperate with too. 

Integrate financial management software into your workflows

These days, innovations are introduced in literally all business niches, and accounting is included in that list as well. Implementing various software tools for the purpose of automating some processes and enabling the overall company productivity is gaining momentum. The selection of software solutions depends on your ongoing needs and the specifics of workflows that need to be managed. For accounting businesses, the best choice would be financial management software like Mint or other tools such as a tech stack used by accounting professionals within their toolbox.

Ensure the security of the credit card information of your clients

This recommendation will come in handy if your accounting firm provides the ability of digital payments for financial services for your clients. Basically, credit card data fraud is supposed to be the most popular in the financial area, no matter whether you are a client of a certain bank or owner of an accounting business. 

So it is essential to protect your clients from this type of financial fraud. If your firm allows clients to pay for services on your website, mobile app, or other types of online transactions, select the highly secured payments gateways like PayPal, Payoneer, etc. If at this moment you cannot provide secure digital payments, then you should suggest your client pay in cash or send the receipts to help them avoid financial fraud with their private information.

Hold a regular audit of your finances

Money likes to be counted. Along with being constantly engaged in your business process, particularly related to finances and money, you need to hold a finance audit by hiring a credible independent expert externally. It helps to reveal the proper dilution of your budget, the correctness of monthly financial reports, the correspondence of your financial documents to the official financial standards and regulations, check the tax payments and their correctness, etc. So even if your accounting business is now in a fraud scheme, the audit expert will reveal it asap and provide the solutions that can fix this problem. 

Develop a strong privacy policy 

Your employees and partners have to be aware of the consequences if they will ever try to put your business into a financial fraud scheme. They need to be familiar with each point of this policy before signing the contract with your firm. It doesn’t mean that your employees have to be under pressure during their working time, but they need to clearly understand the punishments they can get if their intention will not be 100% transparent and beneficial for your accounting business. All business information must be held under NDA, and this type of contract is advisable to sign with each employee and partner you share sensitive financial information.

To sum up

Frankly speaking, the accounting industry is under constant threat of being involved in financial fraud, more likely than in other business spheres. You will never guess who will be that person who will commit fraud related to your accounting firm. The tips we discussed in this post will surely help you avoid fraud situations and learn how to detect them at an early stage. However, do not be constantly afraid of getting into financial fraud. 

Your pivotal task is to be aware of various types of these frauds and know precise solutions on how to deal with them in the short term to avoid harm to your accounting business. This knowledge can be provided by your financial advisors or partners, but before, make sure these advisors are reliable.

How to Do Accounting for an LLC: All you Need to Know

Getting your business’s accounting in order has many benefits. Not only does it help with bookkeeping and taxes, but it’ll also bring peace of mind. Additionally, if you’re someone who isn’t detail-oriented, having organized financial records and accounting can be helpful for budgeting and business projections. 

Why should a business be registered as a Limited Liability Company (LLC)?

An LLC includes the features of a sole proprietorship, a partnership, and a corporation. The LLC, therefore, presents itself as the most flexible business structure. As opposed to a sole proprietorship, an LLC protects the individual from debts and lawsuits. When filing taxes, a single-person LLC can file taxes as a sole proprietor or as a corporation. Alternatively, an LLC with multiple owners can file taxes as a partnership or corporation. For example, if you’re looking to start an LLC in Florida please make sure to familiarize yourself with the local laws.

Does an LLC need to open a business bank account?

Laws mandate LLCs to open a bank account. Consider the following when deciding on the bank:

  • What type of account best meets your requirements?
  • The fee charged by the bank.
  • Choice of online/in-person services offered by the bank.
  • Network of branches of the bank in the area of the business’s operations. 

The types of accounts that need to be opened include:

  • Business Checking Account – For the business to receive customer payments and pay business expenses.
  • Business Savings Account – For the business to save a part of the income for tax obligations and unforeseeable business expenses. 


Why is it important to separate personal and business finances?

Separation of personal and business finances is vital. Business expenses should not be made from personal accounts and vice versa. Also, don’t transfer funds from the business account to a personal account. Separation of finances helps in consolidating business income and expenses in one place and makes it easier to calculate the business’s tax obligations accurately. One could also enroll in formal accounting/bookkeeping classes to learn the basics. 


What are the options in the choice of accounting methods for an LLC?

LLCs can choose to follow one of two options in accounting methods:

  • Cash accounting – In this method, income is recognized and recorded when money is received. Likewise, expenses are recognized and recorded when money is paid. 
  • Accrual accounting – Here, revenue is recognized and recorded when earned, not when received. Also, an expense is recognized and recorded when incurred, not when paid. The drawback of this accounting method is that it does not give a true picture of a business’s cash flow. On the other hand, it provides an accurate picture of its income and expenses during a specific duration of time. 

Whatever accounting method the business chooses, the business will need to stay with it for all future tax filings. 


Should the LLCs do their bookkeeping in-house or outsource it?

Bookkeeping is the tracking and recording of the business’s income and expenses. This must be done diligently to accurately track the business’s finances, prepare correct financial statements, and file correct tax returns. Depending on the size and maturity of the business, the available options for bookkeeping include:

  • In-house bookkeeping – Typically, in-house bookkeeping would not be required for early-stage businesses. As the business matures, it may decide to hire a team of bookkeepers to record the firm’s financial transactions. In-house bookkeeping, invariably, works out to be the most expensive option.
  • Outsourced bookkeeping – This bookkeeping method could be done by hiring a part-time bookkeeper or by subscribing to an online bookkeeping service. Businesses could consider services such as InsightsOfficer from PwC.

How should business expenses be tracked?

IRS stipulates and provides a detailed list of business expenses, income earned, and payable taxes that need to be tracked and recorded. The important ones include:

  • Business receipts for office supplies, work-related travel expenses, etc.
  • Bank statements
  • Bill for office utilities, internet/telephone expenses, etc.
  • Invoices
  • Financial statements
  • Payment proofs
  • Tax returns

IRS regulations also stipulate the length of time that each of the different types of records needs to be maintained. The length of time that the documentation needs to be stored varies depending on the type of financial record. Businesses have the option of choosing physical documentation or a cloud-based service.

What are the options available for the business to receive payments?

In addition to the traditional methods of cheque/direct deposits, other options available to the business for receiving payments are:

  • Online payments – Online receipt of payments helps in the faster clearance of invoices. If the business has opted for cloud-based accounting software, the software would normally be integrated with an online payment tool to manage the business’s payments.
  • Automated invoicing – To simplify their invoicing processes, businesses can opt for an automated invoicing system. Most cloud-based accounting systems integrate this feature for recurring invoices.

How should the LLC’s payroll be set up?

Setting up payroll is essential for any business that employs staff. The employees of the business need to be appropriately classified as permanent employees, contractors, part-time employees, etc. After the staff has been classified, the business must design the payroll by factoring in the different financial regulations specific to the different classes of personnel. Insights on payroll management from ADP are a useful source of information. One could also find other reliable resources on the subject.

What are the tax obligations of an LLC?

LLCs are bound by law to comply with tax regulations at the federal and state levels. The leadership enrolling in a course to learn the basics of preparing tax returns will help adhere to compliance requirements. The taxes that the LLC needs to pay include:

  • Income tax – Tax to be paid on the income earned by the business.
  • Employment tax – Federal Insurance Contributions Act (FICA) mandates LLCs to pay employment tax, including contributions towards social security and medicare. 
  • Sales Tax – This tax varies depending on the state in which the business is based. 

Also, to manage its accounting needs the business can decide to either hire or consult with a professional business accountant. A trained business accountant can advise the business on the appropriate legal structure for the firm, tax-related obligations, and financial strategy and oversee financial reporting. 

Accounting plays a critical role in running a business by helping track income and expenses and enabling statutory compliance. It also provides the business’s management and investors with the financial information required to make informed business decisions. 


Author Bio:

Matt Horwitz is the founder of LLC University, a website that teaches people how to form LLCs. Matt is the leading authority in LLC education and is featured in CNBC, Yahoo Finance, Entrepreneur Magazine, and the US Chamber of Commerce. Matt holds a Bachelor’s Degree in business from Drexel University with a concentration in business law. LLC University®, established in 2010, was the first company to create free LLC courses in all 50 states.

5 ways to protect yourself against financial fraud in business


As you know, scammers can use completely different ways to get your money, today we will discuss how they do it and how to avoid it in your business.

Types of Fraud

I would like to note that there are a lot of them, and the only true advice that fits everything is to be careful.

1. entertainment expenses

Everything happens as follows: the company, after planning negotiations with new clients, pays a fraudulent manager who allegedly pays for the event. For example, a restaurant for a meeting between agreed. But it happens that for some reason the client pays for this service, and the warehouse fraudster takes the money for himself.

How to avoid this? Do not use cash payment, use cards – it is more reliable, and there is a chance to get your money back with the help of the bank with which the transactions took place.


2. Fake bonuses.

Here is the following sequence: the authorities support fake reports, according to which the norms and agreements at the enterprise are not observed, after which he receives his benefit in the form of the products of this company or money. For example, a reporting document may indicate that 500 units of a cook were manufactured, more money was spent, but in fact 400 units of goods were conditionally produced. The money, which was supposed to be almost another 100, this man took for himself and, possibly, for the people with whom he is in a conspiracy.

What to do in such a situation?

Keep accurate records on a regular basis. To come to him, it is worth hiring a third-party specialist. It must be a person not from your company. Otherwise, he can be bribed.


3. Past the checkout

It happens that employees deceive their superiors, taking their earnings. They do this by saying that there were technical problems in production. For example: they report that there was no light in the barbershop, so there were no customers. In fact, as it becomes known later, there was light, only the employee took the proceeds for himself.

How to avoid such situations? Monitoring. Try to observe the work of your subordinate in the possible ways. Install indoor surveillance cameras. Come with unscheduled inspections and demand activity reports.


4. “Non-working territories”

This version of fraud is similar to the previous one, but is more suitable for business with land areas. What is happening: some of the land plots are simply not included in the register of cultivated land, but work is underway on them and all the output is taken away by scammers – a management that secretly extends the harvest and takes profits for itself.

How to avoid this? Constant control of budget distribution, reporting. Be sure to conduct an inventory and reconciliation of the land used in your business. This requires professionals.


5. Leasing. 

The landlord puts a false price on the premises. It happens to Chaucer that he demands to pay half the amount in cash, and the other half, the real one, which is indicated in the contract, to the account.

Advice in this case: monitor prices on the market, stay tuned for real estate prices. You can even try to become a “mystery shopper” to see how the answers about prices will differ under different conditions and for different people.

We also want to add about Internet fraud. If you do business on the Internet or just post information on social networking pages, be careful. You may receive fake emails with context about output attachments, as well as bad links. Such links take you to a site that can download a virus to your computer, leaking data about your page to the Internet, and so on. Try to filter such emails. Those that come to the “spam” department are better not to open at all. Delete immediately. If your business is related to investing in cryptocurrencies, we advise you to take advantage of the advice and current news on ICOholder. Protect yourself and your money by avoiding scams on the Internet.

If you do become a victim of fraud in the financial markets, you should seek help from the police or the relevant bank, where they will help you solve the problem. Attach all kinds of evidence: your documents, screenshots of correspondence and letters, and so on.

By the way, it would be nice to have a financial airbag for such a case. at such a moment, it will help not only you, but also the restoration of your business.



Only your attentiveness and how you understand your chosen case will help you resolve difficult situations. Try to have more control over your business and the process in it. So there will be less lost nerves and money for nothing.

Written by Lewis Anderton

Ways to Avoid Becoming a Victim of Business Financial Fraud


If you’re an accounting professional, and you’re thinking about making your mark in the online world, you should know that there are many ways in which this amazing open environment can lead to all sorts of troubles. According to Business Fraud Prevention, businesses lose up to five percent of their annual gross revenue due to different types of fraud. 

Moreover, the report states that small businesses and startups are the main targets of financial scams, while large corporate entities are less likely to suffer a similar fate. The risk of financial swindles is even greater for those who focus their operations on the internet, which is nowadays an extremely popular method of doing business.

We did some research and came up with these practical pieces of advice that should help you avoid falling victim to financial fraud as an accountant.

Checking a company background

When a potential partner or a client approach, the first order of business is checking for their credentials. This goes for both online and offline communication. However, checking the company address, phone number, website, and other contact information should not be the end of your checkup process because these things are easy to fake.

It’s up to accounting to provide vital decision-making information, checking crucial business data is one of that information. With a proper company background checkup, you could prevent loss of money, and legal issues, and help other people keep their businesses afloat. 

Another important aspect of inquiry should be the list of former partners and companies that did business with the company that you are considering working with. If there’s no evidence of past work, you should plan your future steps carefully. If you’re lucky, you might have been approached with a new business that’s yet to grow its portfolio, but there’s always a chance that the list of previous partners and clients is empty because there were never any.

Keep your monetary flow under control

Although we mostly fear that the risk of fraud comes from the outside, it’s important to understand that many financial fraud cases occur on the inside of a company. Therefore, you should focus your energy on internal elements that control the flow of money.

Regular books audit helps notice any irregularities in cash payments, refunds, product returns, inventory management, or other accounting functions. 

Inform yourself about all the available and popular methods of payment, so you could keep track of all the doors that money can go through. Moreover, organize a list of your teammates that handle cash payments or refunds, and help them get appropriate safety training so they too could avoid scams. This also allows you to hold those people accountable in case they make fraudulent payments because they had the necessary training to avoid such situations.

People who check the legitimacy of payments should also become an important aspect of your concerns. In many cases, company employees are those responsible for financial fraud. Make sure you have trustworthy people on your team that won’t take advantage of your confidence. Some people avoid these types of troubles by hiring accounting professionals with a good background, usually through word of mouth.

Practice safe internet usage

The list of ways in which someone could exploit our lack of concentration or technical inexperience is all but limitless. Everything from malicious emails to websites that are built to capture your banking data is out there and the only way to prevent getting scammed is to be cautious while performing professional activities online. More than banking data, all the essential business files and data can be lost.

If you are about to make a payment for a good or service through a website, make sure it runs under an HTTPS certificate because this means any information you disclose stays safe. Moreover, if you get a suspicious email and parts of that offer include sending money or your banking data it’s best to avoid complying with any of the demands in this email.

Downloading unlicensed software for work is another way to let third-party into your system and risk losing vital business information and money. Shady software solutions could hide malware that steals your passwords or corrupts other software. It’s not unusual for criminals to send out viruses that encrypt all data so they could ask for ransom later. Backing up business essentials is one of the best ways to avoid paying ransom to retrieve stolen information.


Control and focus are your main weapons in defense against all sorts of financial swindlers that are out to get you. This doesn’t mean that you should treat everyone as a potential threat, you don’t want to skip a good business opportunity because of your lack of trust. Keep your hands open for everyone just make sure their hands are just as open as yours and there’s nothing they hide behind their backs.

What Is Customer Experience in the Accounting World?

With customer experience (CX) being emphasized as a driver of success, businesses across the industries shouldn’t sleep or pass on the opportunity to make the most of it. Differentiated from customer service which resolves issues, helps solve customer issues and offer advice, CX represents the accurate perception of the interactions customers have with your company. It’s a real competitive advantage that can attract loyal clients and boost revenue when leveraged to the maximum. 


Occurring from the very first touchpoint with your firm up until the last minute of the interaction, CX ensures that the customer journey is as seamless as possible. This is particularly relevant to the accounting realm where technological innovations tend to automate the tasks of accountants, bookkeepers and tax preparers like data entry. When the ‘wow’ element in accounting is lost, focusing on providing the best customer experience helps bring it back. 


To connect with your customers beyond helping to manage debits and credits, consider reevaluating how you approach the following activities:

1. Collecting and analyzing data

Gaining clear insight into the collected data isn’t just about analyzing the performance of a company. It’s also about observing what areas from the entire data collection process are contributing to engagement and a satisfactory customer experience. When the customer has a positive perception of his experience with the help of your services, they are more likely to use it to make more informed business decisions. 


An efficient data analysis system is instrumental to meeting your customers’ needs. Although the connection might seem indirect at first, systemizing the inflow of accounting data guarantees a happy repeat customer. 

2. Streamlining billing and invoicing

No one likes to deal with the complexity of payments. If a customer notices that the accounting firm they are doing business with isn’t being efficient with billing and invoicing, they may quickly switch to another company. This is because when money is on the line, customers are typically less forgiving of mistakes that companies make. 


To avoid disappointing those who keep you in business, you should be the example and  streamline the payment process of sending and receiving the financial documents. This way, you’re minimizing the number of miscalculations and other errors that would cost you time, money, and the customer.         

3. Ensuring data privacy        

Research by Salesforce found that 46% of customers feel like they don’t have control over their personal data anymore. The more clients become concerned with how their data is handled by companies they purchase from, the higher the pressure on businesses to be transparent about their customer data usage. In accounting, the question of data privacy is of utmost concern. 


Since web transactions are prone to hacking, companies should focus on adopting accounting software that guarantees the security of customer data. This will help prevent customers’ identities and money from being stolen and a terrible customer experience from driving clients away from you.       

4. Expanding advisory services 

It’s difficult to improve customer retention if your customer experience is lacking. To remain competitive on the market with an abundance of accounting, bookkeeping and tax firms, you should invest in offering the CFO & advisory services you can provide in addition to the quality accounting services you do now. (if you aren’t already). With the global accounting services market forecasted to reach $735.94 billion in 2025, it’s only fair to expect this to be a competitive advantage that will make you stand out. 


Besides, offering advice to business owners who often feel in the dark when navigating their financials leads to happy clients and a satisfactory customer experience. Whether you focus on coaching your clients on when to purchase assets or giving a fresh perspective on the old ways they’re handling their finances, you’re likely to get positive feedback. 

5. Onboarding clients

One of the most overlooked areas for improving customer experience is paying more attention to onboarding clients. This process helps both parties determine the first steps of the collaboration and what information would make it as smooth as possible. 


To ensure that the onboarding process meets the customer’s needs as much as the goals of the accounting firm, you should have a predefined scope checklist in place. Featuring statements like ‘add the client to the newsletter’, ‘schedule a follow-up a week after the initial meeting’, and ‘get documentation from the client’, it acts as a guiding tool that ensures that the needs of both the business and the customer are fully met.      

6. Providing omni-channel communication

A multichannel approach to customers is key to building strong customer relationships. It empowers customer service staff to use various messaging platforms to reach the customer and provide him with a solution. There are also several more ways to enhance communication with clients for an optimal customer experience:


  • Ensure that the customers’ files are stored securely 
  • Schedule an automatic request reminder system for following up with customers 
  • Offer a digital portal that makes uploading files quick and easy 


When every communication element is in check, you’re bound to improve your customer satisfaction score as well as your Net Promoter Score. It might not be an instant hit — there’s no one-size-fits-all solution — but with time, you’ll get a gist of what communication channels your customers prefer and be able to cater to them accordingly.    


In short, at least consider responding in kind, which is to say reaching back using the same medium originally used by the customer such as a call for call, text with text, email with an email.

7. Offering self-service tools

Automating customer service isn’t just an option — it’s a necessity. Although you don’t have to have an automation-based solution to every step of the customer service you provide, it takes some weight off of you when you allow customers to figure things out on their own. Besides, 67% of customers prefer to use self-service tools instead of talking to a customer service agent. 


Chances are, you already have a comprehensive FAQ page on your website where your customers can find answers to the most commonly asked questions. But you can take it a step further and start a blog with more in-depth information on the topics that are relevant to your clients. The best part is that it’s available 24/7, and there are no hidden costs involved. 

Wrapping up

Remaining flexible when offering customer service is an underestimated but determining factor in whether or not the customer experience your customers get is up to par with their ever-changing expectations. With technology enabling the automation of many tasks, business owners can now rely on software to help keep customer data safe and transactions secure.  For more information, attend this webinar dedicated to helping accounting professionals utilize effective client retention management (CRM) systems and more.  Register NOW!


Polish your customer management strategy and be willing to tweak it if the demand calls for it. This way, you’ll be able to stay competitive and boost your customer retention rate like never before. 

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