You hire accountants, lawyers and other professionals because they have specialized knowledge that you don't have. This means that you can count on them to do their work without supervision, right? Well, not so fast.
Everyone makes occasional errors. As long as the name of your business appears on the paperwork, you have ultimate responsibility. So, whether you need to stay out of the line of sight of a possible IRS audit or you want to ensure that your advertising is accurate, you need to periodically check the work of the people that you hire to help with your business.
Here are some guidelines for checking the work of people who know their business better than you do.
Accountants Know Where the Debits Go, but You Can Still Check the Numbers
Before the advent of tax software, one accountant admitted that he knew the accounting rules in impressive detail, but he was quick to make mathematical errors. Happily, the software now eliminates mathematical errors, but entering accurate data in the right place is still largely a human effort.
While W2 earnings generally come straight from a computer, a more common area of error is the 1099 reporting of non-employee earnings. Granted, these recipients will be quick to tell you about errors, but it is far less work to get it right before you send the forms to the IRS. And, if you do have to send corrected 1099s, don't do it before you make sure the "CORRECTED" box is checked. Otherwise, these forms will start to seem like a second career.
You also want to look at the big picture and trust your intuition if you think that something is wrong. For example, if your tax forms (or even your financial statements) show earnings or profits significantly different than you expected them to be, you may not know how to dig into the financial weeds to find out if the number is accurate. But, you certainly can ask the accountant to explain it to you.
Lawyers Know the Law, but You Know the Questions
Your eyes may glaze over after reading the first sentence of a contract or other legal document, but your signature commits you to every word of legalese. Lawyers will tell you that the legalese is necessary for the sake of precision, but it certainly seems like it is intended to discourage careful review by laypeople.
So, make yourself an 8-ounce cup of espresso (or a highly-caffeinated beverage of choice), and read every word before signing. Check every number for accuracy and make sure that you understand every nuance of what you are committing to. Then, discuss your questions with your lawyer. If you don't understand the answers, insist that he or she speak to you in English.
Advertising Agencies Know How to Sell, but You Know How to Proofread
It is not uncommon to leave your company's ad campaign largely in the hands of advertising professionals. But, understand that creative people do not always do the best job with details, so don't let them release print or broadcast ads without conducting a full review.
Remember that just one character can make a huge difference. Do you really want to commit to a 100 percent discount when you intended it to be 10 percent? Or do you want customers beating a path to 2000 Orchard Street when your store is a mile away at 2000 Orchard Lane? Don't allow any ad to go out before you thoroughly check the fine points.
Software Does Things Consistently, but You Know When it's Consistently Wrong
Today's off-the-shelf software is generally pretty accurate, but it's not perfect, so you need to keep a watchful eye on the details. For example, a great way to monitor tax preparation software is to watch the results of your entries on the tax totals that are typically displayed on every screen. If you enter a known deduction and then see the taxes increase, there's something seriously wrong that you need to investigate.
When you hire a company to produce custom software for your business, you need to get involved in testing before taking it live. Make sure that the company uses test data that you provide because you can then predict the results. Even when tests run clean, you should also run the new software in parallel with your old system over an extended time period to make sure that the results are accurate to the penny.
When it Comes to Your Business, You are the Ultimate Expert
As a small business owner, you wear many hats, but you can't be an expert in every aspect of your company. Even though you cannot match the knowledge of the outside resources that you hire, they can't match your knowledge either. In the end, everything boils down to details that you can — and should — check.