• Sunny Leand -
• 27.04.2018

Starry-eyed entrepreneurs take great pride in the incorporation documents which make their operation official, but there is a lot of responsibility tied to that prestigious title of Director. Basically you are legally liable for any and all activities of your business, as an aggregation of course, so you need to make special arrangements to make sure to protect yourself from the adverse consequences that could arise out of the compulsory assumption of that liability.

Align operations with a clear mission-statement

Every business which has a clearly-defined mission statement goes a long way in covering the liability an owner would incur should a rogue element creep into the operation at employer or accounting level. If things don’t quite seem to be adding up, a mission statement which is clearly defined and communicated can make for a great source of admissible evidence to protect you as the owner and founder.

Learn the basics of bookkeeping and accounting

Learning the basics of bookkeeping and accounting can go a long way in helping you keep an eye on proceedings and protect you from rogue accounting practices that would ultimately have you liable for the effects. The basics are simply that the amount of money you have is equal to your revenue less expenditure, but it’s important to be able to read financial statements and reports and effectively track and trace the various money trails which develop.

Periodically conduct physical checks

Unfortunately the word of the accounting department or even external auditors that everything is okay doesn’t quite cover you legally as the business owner should there be some illegal activity going on pertaining to the finances. Consequently, make it part of your routine to complete some physical checks, the most basic of which entails peeking into the bank account to see if the money claimed to be there is indeed there.

Use multiple record-keeping channels

As a basic standard you’d probably by default use at least two record-keeping solutions with regards to your business operations as well as your financial books. This would typically entail either permanently employed accounting and auditing staff in addition to some accounting and auditing software to be used, like a few of those which are offered by business banking institutions. That covers the financial records – you’d perhaps also use two solutions with regards to keeping records of your day-to-day business operations, such as stock-taking, inventory tracking, etc.

On the side of HR and payroll, something like generating check stubs would be taken care of with the use of an online platform which you can perhaps link to a cloud-based record storage database, in addition to keeping internal records on in-house data storage equipment.

It’s important to keep more than one record so that any discrepancies can be picked up and dealt with as part of covering your liability as the business owner. All you need in the absence of proof that you’re not liable for discrepancies is evidence that you put measures in place to try and prevent such discrepancies.