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text 2017-03-15 01:53
The Southbourne Tax Group Review: How to Protect Your Business from Fraud

 

5 Commercial Fraud Prevention Tips

 

This March marks the 13th anniversary of Fraud Prevention Month. While the annual program focuses on protecting the consumer, businesses should take advantage of the time to better educate themselves on commercial fraud. A recent poll of Canadian businesses found that half of them know or suspect that they have been hit by fraud in past year.

 

There are numerous ways that business fraud can occur in a transaction. It can occur from business to consumer or consumer to business. It can come from internal staff or external threats. But the one familiar element is that the party committing the fraud has acted dishonestly. Business fraud is more common in some industries than others. Banking and financial services, government, manufacturing, healthcare, education, and the retail sector are all industries that struggle with fraud. However, no commercial enterprise, big or small, is safe.

 

As a business insurance and risk management expert, Park Insurance is here to provide you with some helpful tips that could save you from the impending threat of commercial fraud.

 

5 Fraud Prevention Tips You Need to Apply to Your Business Today

 

  1. Preparing for Commercial Cyber-fraud

 

It should come as no surprise that cybercrime headlines this list of commercial fraud prevention tips. But the fact that 50% of Canadian executives admit that their businesses were hacked last year is alarming. Credit card fraud, identity theft, account takeover and/or hijacking attempts are becoming so common that businesses are hiring full-time staff and/or consultants to monitor cyber security. Cyber-fraud occurs from internal (employees stealing corporate information) and external culprits alike and they are becoming more sophisticated with each passing month. Improved staff awareness, real-time software updates, enhanced backup protocol, and encrypted communications will help stave off sophisticated cyber-fraudsters. Follow these six tips to protecting your business from cyberattacks.

 

  1. Pre-Employment Screening

 

Internal fraud is one of the most common forms of business fraud and is certainly one of the most impactful. Not only can it go undetected and occur over a long period of time, devastating your business financially, it can ruin your corporate culture. Trust is immediately lost. From this point forward, institute an improved pre-employment screening program that includes intensive backgrounds checks and more thorough reference checks. If fraud is a significant concern (you operate in one of the higher risk industries mentioned in the introduction) consider using a professional service that specializes in pre-employment screening. Some human resource recruiters offer specialized screening.

 

  1. Improved Internal Accounting (w/Redundancy)

 

You may think that placing one person in charge of accounting, including the processing of payments and invoices, making bank deposits, handling petty cash and managing bank statements is smart because it provides a single point of responsibility. It’s not. It opens you up to internal fraud, should that employee/manager seek to do your business harm. Even if the individual can be trusted, they are at risk of being compromised. If they hold all of the chips, your business can be hit and decimated in one shot.

 

Instead, spread and/or rotate these duties amongst qualified staff. In addition, create redundancy when it comes to the accounting of all financials. This will allow you, for instance, to check duplicates of a month’s invoices and statements to ensure that the numbers match. Have separate parties check financial statements too, for added caution.

 

All of these improved internal accounting policies should be compiled and posted for all to see. If you do have an internal threat working within the company, they will be less likely to take harmful action if they know that these redundant checks and balances are in place.

 

  1. Encourage Whistleblowing

 

Whistleblowing may seem like a dirty word when it comes to fostering a trusting corporate culture, but in the end your staff should see that it is nothing to worry about – if there is nothing to worry about. Institute an official fraud reporting protocol for staff, vendors and even customers/clients to anonymously report suspected fraudulent activities. It is essential that everyone involved receives a clear document that explains what constitutes fraud. It must also state that the process should never be used to air grievances, which can happen when there is friction between employees. Reports should be backed by facts and evidence. Lastly, it must be made clear to employees, vendors, and customers/clients that all reports are regarded as confidential without reprisal.

 

  1. Secure Insurance to Hedge Business Risk of Fraud

 

For all of your efforts, fraud can still occur. You want to protect your business from this, hedging the risk of all damages that can come in the form of financial loss, liability, and innumerable other concerns. For a comprehensive and unbiased accounting of your existing policy, secure the services of an independent insurance broker with expertise in all forms of commercial crime and commercial liability insurance. Contact Park Insurance before your business joins the approximate 50% of Canadian businesses that have been hit by fraud.

 

Additional resources for business accounting tips are available here

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text 2017-03-14 01:45
The Southbourne Tax Group: 5 surprising things you can deduct from your income taxes

 

“Can I deduct this?” When Americans sit down to fill out their income-tax forms on or before the April 15 deadline, that’s the question they’ll likely ask the most.

 

They may be shocked by how often the answer is “yes,” and the sheer variety of expenses they can deduct. Most people know that business-related items are usually tax deductible — no matter how odd. That could include body oil for a masseuse or professional body builder, says Dave Du Val, vice president of customer advocacy at TaxAudit.com, which is based in Sacramento, Calif. Ditto, free beer used for a sales promotion. But a recent survey showed that only 51% of more than 1,000 people surveyed understood relatively basic questions about their income taxes, and the estimated average $2,840 tax refund for 2017 likely does not include the refunds that people did not know they could claim.

 

Of course, most people know many charitable donations are deductible, but some people are especially watchful for deductions others might miss. Grafton “Cap” Willey, managing director at CBIZ Tofias, an accounting and professional services provider in Providence, R.I., helped a client who’d bought a house and land — and wanted to build a better house — write off the fair market value of the windows, lumber and other usable items from the property that he donated to a homeless charity. And documentation is critical. “Take a photo with your iPhone of that bag of clothes you donate, and get a receipt. That all counts as evidence.”

 

To help people think more broadly about the kinds of things they can deduct, here are five unusual tax deductions:

 

Swimming pools

 

Context is everything when it comes to deductions, especially when expenses are being characterized as being for medical purposes. Johanna Turner, senior partner at Milestones Financial Planning in Mayfield, Ky., had clients who successfully deducted the full cost of a $40,000 swimming pool. “Their child had been injured in an accident,” she says. “They received doctor’s orders for swimming therapy.” The key here is making sure a doctor signs off on the deductions, Turner says. There are also deductions taken for hot tubs and pools as long as they, too, are doctor-prescribed, adds Megan Thompson, a certified public accountant at Thompson Accounting in San Jose, Calif. Upgrading your property for lifestyle or reselling, for instance, would not count.

 

Abortion

 

This may be the most politically and ideologically divisive of all deductions. The IRS says: “You can include in medical expenses the amount you pay for a legal abortion.” So an abortion — which can cost from $500 to $1,000 — could be deductible if it was included with other medical expenses. Taxpayers can also include in medical expenses the amount they pay to purchase a pregnancy test kit to determine if they are pregnant, and the cost of a sterilization or vasectomy. When it comes to all medical expenses, you cannot include those that were paid by insurance companies or other sources, and the total medical expenses in question need to exceed 10% of your adjusted gross income (this falls to 7.5% for those who are 65 or over for all medical expenses).

 

Gambling losses

 

“If you have gambling gains, you can deduct a large number of expenses to go to Vegas up to the point where it offsets much or all of the gains,” says Scott Bishop, director of financial planning at STA Wealth Management in Houston. You can deduct your losses, but no more than your winnings in that tax year. Gambling income includes winnings from lotteries, raffles, horse races and casinos, and fair market value of prizes such as cars and trips. “To deduct your losses, you must be able to provide receipts, tickets, statements or other records,” the IRS states. For casinos, you need copies of check-cashing records. Some states don’t allow deductions on gambling losses, however.

 

Service dogs and dog food

 

Man’s best friends can be another tax-deductible expense. “I had a client with a warehouse deduct the cost of buying guard dogs,” Bishop says. Their pet food may also be deducted. He is aware of one case where a person deducted the cost of transporting their six dogs as a work-related moving expense. Taxpayers may also include as medical expenses the costs of buying, training and maintaining a guide dog or other service animal to assist a person with physical disabilities. This includes any costs, such as food, grooming and veterinary care incurred in maintaining the health of the service animal.

 

Gender confirmation surgery

 

In 2010, the federal tax court ruled in favor of a transgender woman, Rhiannon O’Donnabhain, who had taken up a case against the IRS for refusing to allow a $5,000 deduction for $25,000 in medical expenses for gender confirmation surgery, those costs “not compensated for by insurance or otherwise, for medical care of the taxpayer.” In its ruling, the tax court said gender-identity disorder is widely recognized in diagnostic and psychiatric reference texts, and all three experts testifying in the case consider the disorder a serious medical condition, and the mental-health professionals who examined O’Donnabhain found that her disorder was a severe impairment.

 

Additional resources for business accounting tips are available here.

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