Keep your Small Business Healthy by Improving Due Diligence
In today’s world of Sarbanes-Oxley, corporate compliance and good governance has become a way of life. Thanks to SOX, audits are a now a mantra for any company looking to launch an IPO.
Ok, so if you are a publicly traded company, there are probably a lot of people looking over your shoulder.
But what about the small business, don’t they need to be diligent too?
What better way to assess the true state of your company than to perform a due diligence audit?
In an article I read today on TheStreet.com, 5 tips were offered to that end:
Take a look at your financials, tax returns, patent and trademarks filings, customer lists, vendor files and employment contracts. Is your company in good standing and authorized to do business in all of the necessary jurisdictions? Have you filed your payroll withholding payments or unemployment insurance regularly? Check with the Better Business Bureau or other professional licensing organization to make sure that you don’t have any complaints against you. With so many things for you to do, something is bound to slip between the cracks. If you don’t know about it- you can’t fix it. Remember, you want to manage and minimize your risk.
Don’t be afraid to know when you are in over your head, or could just use a helping hand. An attorney can help you with legal matters, and an accountant can assist you with the IRS. Sometimes you may just need some information or filing services that don’t require you to have legal and accounting advice. There are service companies out there that can save you money.
Who is working for and representing you? Many companies routinely include background checks in the hiring process these days- so should you.
Determine ahead of time why you are conducting the audit and what kinds of things you will address. Take it for granted that you will find things out, but not everything needs to turn into a overhaul of your business enterprise. Accepting that in many cases, nothing will be perfect!
Whether you find a serious problem or minor flaws, you should be prepared to take the necessary action to improve your organization. Remember, the whole point of this due diligence audit was to identify problem areas. If you are not sure what to act on, try talking to staff and trusted employees. They already probably deal with the things you have uncovered on a daily basis, and may have suggestions for improvement or resolution.
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