Audits are a statutory requirement for public, listed companies. However, for small business owners, auditing seems like an expensive service that they don’t require. Something to consider though is that auditing your company’s financial statements on a regular basis does have a lot of advantages. In case you approach an investor in the near future, they may ask for your company’s past financial performance. If you are able to furnish audited financial statements, it just shows that you are professional about your business and are interested in a long term future.
The audit protection insurance plan is offered by Accountancy Insurance, one of the leading audit insurance providers in the country. The plan is essentially designed to help clients afford the fee of an official audit, a due diligence review, or an official enquiry with government authorities, such as the Inland Revenue. The Inland Revenue pays a lot of attention to the financial statements published by small businesses.
Since most businesses post increasing profits year after year, there’s a lot of potential for fraud. If you don’t have effective management in the upper tiers of your company, there’s very likely to be some cases of fraud within the organisation. As a result, there’s a very high chance that the Inland Revenue may order a follow-up audit to highlight any issues. Audits cost a lot of money, which is one of the main reasons why so many companies avoid getting their accounts audited on a yearly basis. However, with the protection insurance offered by companies like Accountancy Insurance, you can get your accounts audited, without the worry of paying more. Here are some reasons why you should consider buying this insurance policy.
It Prevents Abnormal Losses
Small businesses do not operate on high profit margins. In most cases, profits are usually limited, and business owners generally try their hardest to make even a small profit, so their financial statements are published in black. If you are suddenly asked to pay for an audit, it’s going to seriously affect your company’s profitability. However, if you have an audit insurance policy, you don’t have to worry about paying the exorbitant costs of the audit by yourself. The insurance company will pay for the audit, thus allowing you to carry on with your business without having to worry about being blindsided by abnormal losses.
You need to be compliant with the tax laws and legislations highlighted by the authorities. It is important that you follow all of the rules and regulations to avoid being fined. Keep in mind that your business is at a constant risk of a surprise check from the authorities. If they find that the records were not kept properly, or if there was an issue, they are going to ask you for an audit again. Not only will this disrupt your finances, but also affect worker performance in the office. However, with audit protection insurance, your finances won’t be affected. All businesses should consider applying for this policy to save on unnecessary expenditure.