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How Fraud and Scams Affect Small Businesses—and How to Move Forward

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Fraud and scams are more than just occasional risks for small businesses—they’re a growing threat that can damage finances, reputation, and even long-term viability. From fake invoices and phishing emails to employee theft and cyberattacks, the impact can be devastating.

Small businesses often lack the resources and safeguards that larger organizations use to detect and prevent fraud. That makes them attractive targets for scammers—and particularly vulnerable to lasting harm.

In this article, we’ll explore how fraud and scams affect small businesses, common warning signs, and what steps owners can take to recover and protect their future.

The Real Cost of Fraud for Small Businesses
Fraud can take many forms, but the consequences often look the same:

  • Financial loss: Fraud can wipe out bank accounts, damage cash flow, and derail budgets.
  • Reputational damage: Customers may lose trust if data is compromised or if fraud becomes public.
  • Legal and compliance risks: Businesses may be liable for data breaches or face lawsuits from affected parties.
  • Operational disruption: Time, energy, and resources are diverted from growth to crisis management.
  • Emotional toll: Owners and staff may experience stress, mistrust, and anxiety after being targeted.

According to the Association of Certified Fraud Examiners (ACFE), small businesses lose an average of 5% of their annual revenue to fraud, and nearly half of them don’t recover fully.

Common Types of Fraud and Scams Targeting Small Businesses

  • Email and phishing scams: Fraudsters impersonate vendors, customers, or executives to trick employees into sending money or sharing sensitive information.
  • Fake invoices: Scammers send legitimate-looking bills for products or services that were never ordered.
  • Payroll fraud: Employees falsify hours, inflate expense reports, or issue payments to fake vendors.
  • Credit card or payment fraud: Cybercriminals use stolen card details to make fraudulent purchases or steal payment data.
  • Business identity theft: Scammers use a company’s information to open fake credit lines or apply for loans.
  • Vendor scams: Fraudsters pose as suppliers, especially during procurement, and redirect payments to their own accounts.


How to Spot the Warning Signs

  • Sudden unexplained financial shortfalls
  • Duplicate or unusual payments to the same vendor
  • Missing inventory or supplies
  • Vendors or customers claiming unpaid balances despite records
  • Employees reluctant to take vacations or overly protective of their roles (a red flag for internal fraud)
  • Unexpected emails or calls requesting sensitive information or urgent wire transfers

What to Do If You’ve Been Targeted

1. Act quickly: Time is critical. Notify your bank, credit card companies, and law enforcement as soon as you suspect fraud.

2. Document everything: Keep a detailed record of all communications, transactions, and losses related to the incident.

3. Inform stakeholders: If customer or vendor data was compromised, notify them promptly and transparently.

4. Report the fraud:

  • To your bank or payment processor
  • To the FBI’s Internet Crime Complaint Center (IC3)
  • To your local police department
  • To the Federal Trade Commission (FTC)

5. Review your insurance: Check if your business insurance includes fraud or cybercrime coverage—and file a claim if applicable.

6. Get professional help: Consult a lawyer or forensic accountant to assess the damage and support recovery efforts.

How to Move Forward and Prevent Future Fraud

1. Strengthen internal controls

  • Separate duties (e.g., the person who cuts checks shouldn’t reconcile the bank account)
  • Require dual approval for large payments
  • Conduct regular audits, even in small teams

2. Train employees
Teach staff how to recognize phishing emails, invoice scams, and fraudulent behavior. Make fraud awareness part of onboarding and ongoing training.

3. Use secure technology

  • Use reputable accounting and payroll software
  • Enable two-factor authentication
  • Regularly update software and back up data

4. Vet vendors and partners
Always verify new vendors before sending payments. Confirm any changes to payment details with a phone call to a known contact.

5. Monitor financial activity regularly
Review your financial statements and bank activity often. The sooner you catch something suspicious, the better your chances of minimizing damage.

Final Thoughts
Fraud and scams are a painful reality for many small businesses—but they don’t have to define your future. Taking swift action to recover and adopting strong preventive practices can help rebuild trust, restore stability, and make your business more resilient than ever.

The key takeaway? Stay vigilant, educate your team, and treat fraud prevention as an essential part of your business strategy—not just an afterthought. In today’s fast-moving digital world, protecting your business is just as important as growing it.

How to Set Up a Bookkeeping Cycle in QuickBooks Online

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Do you have a regular schedule you follow with your QuickBooks Online work? It can be a good strategy.

Bookkeeping is cyclical. You tend to do the same things over and over, which may get to be a bit of a drag for you. QuickBooks Online can automate some processes, and it certainly helps minimize duplicate data entry, but you’ll undoubtedly find yourself growing weary of repetitive tasks.

We can’t help you avoid this drudgery completely, but we’d like to suggest a new, more organized way to attack your accounting tasks in 2025. It could be especially helpful if you’re a new QuickBooks Online user and don’t have a routine established yet. But even long-time users might find this routine helpful. It can keep things from slipping through the cracks and simply make you more productive and confident that you’re addressing all of your accounting issues.

Give it a try and see what you think.

What Should You Do Every Day?

Even if you don’t have expenses to enter or invoices to process, it’s a good idea to log into QuickBooks Online every day. If you’ve connected your online bank and credit cards to the site (which you absolutely should), there will probably be transactions to go over. So after you’ve taken a look at your Dashboard (especially your Tasks), hover your mouse over Transactions in the toolbar and click Bank transactions.

Click Update in the upper right to make sure you’re seeing the most recent transactions. If you’re doing this every day, it shouldn’t take long to go over the income and expenses that have been imported since you last logged in.

You should be looking at newly imported transactions daily and completing the fields provided as comprehensively as possible.

If you don’t know what Match or Record as transfer mean, we should schedule a session to go over transaction management in QuickBooks Online.

Every Week

You need to be monitoring your accounts receivable and payables on a weekly basis – at minimum. There are two ways to do this. You can:

Run reports.

• Click Reports in the toolbar and scroll down first to Who owes you. Run Accounts receivable aging summary. QuickBooks will display past-due transactions in several columns (Current, 1-30 days, 31-60 days, 61-90 days, and 91 and over). If you’re keeping up with your receivables, you shouldn’t be seeing numbers in most of the columns, unless you’re in a known collections process.

• Scroll down to What you owe and run Accounts payable aging summary. This works like the aging receivables report. Again, you shouldn’t be seeing much activity here unless you’re in a payment dispute with a vendor.

• You can also run the Open Invoices report to quickly see the Due date and Open balance entries here. Ditto the Unpaid Bills report.

Consult the All sales page.

Hover your mouse over Sales in the toolbar and click All sales. The colored bars and numbers at the top of the page show you the status of your sales. Click the orange bar in the middle to see a list of overdue invoices. If there are any, you can set a Send reminder by clicking the corresponding down arrow in the Action column. While you’re there, look at estimates and unbilled income and take any action needed.

Every Two Weeks (or more often, depending on product volume)

If you sell products and track inventory in QuickBooks Online, you should keep a close eye on your stock to see if you need to:

• Reorder,

• Bring in a larger supply because something is selling well, or,

• Discount or discontinue a product because it’s not selling.

Click Reports in the toolbar and run Product/Service List under Sales and customers and look at the Quantity on hand column.

Every Month

Reconcile your accounts (Transactions | Reconcile).

It’s really, really important that you reconcile your accounts every month. We can help you with this.

No one likes to do this, but it’s way easier to do regular reconciliations than it is to have to go back several months to track down a problem. If you’ve never done this in QuickBooks Online, it works similarly to how you used to reconcile your accounts by comparing a bank statement and your paper checkbook register. Only you’re comparing your bank or credit card statements to your accounts in QuickBooks Online. Before you start, make sure you’ve matched and categorized all of your downloaded transactions.

Run a Profit and Loss report for the last month.

Click Reports in the toolbar and click Profit and Loss under Business overview. Did you make a profit last month?

Every Quarter

If you’re planning to apply for a loan or looking for an investor, or if you just want a deeper understanding of how your business is doing, consider having us create and analyze standard financial reports for you, like the Balance Sheet and Statement of Cash Flows. You can run these yourself in QuickBooks Online, but it really takes an accountant’s eye to understand and interpret them.

If you decide that you want to work with us in any capacity, like helping you with reconciliation and/or modifying your Chart of Accounts, there’s another way we can help. If you ever have trouble categorizing an expense, select Uncategorized Expenses as the Category. If we’re meeting with you once a month, we can run a report on these and help you categorize them correctly.

How to Improve the Value of Your Business Before You Retire

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Retirement is a milestone many business owners dream about—but selling or transitioning your business isn’t just about handing over the keys. To ensure a profitable exit, it’s essential to increase your business’s value before you step away. Whether you’re planning to sell to a third party, transition to family, or install a management team, enhancing your business’s worth will make the process smoother and more lucrative.

Here’s a strategic roadmap to help you improve the value of your business before retirement:

1. Start With a Clear Exit Plan
The earlier you plan your exit, the better. Ideally, give yourself 3–5 years. Determine your goals: Do you want to maximize price? Maintain your legacy? Ensure job security for employees? The answers will influence the steps you take.
Action Step: Work with a financial advisor and business consultant to develop an exit strategy aligned with your personal and financial goals.

2. Get a Business Valuation
You can’t improve what you don’t measure. A formal business valuation gives you a realistic view of what your business is currently worth and what factors influence that number.
Action Step: Hire a valuation expert to identify key value drivers and areas for improvement.

3. Strengthen Financial Performance
Buyers look closely at profitability, cash flow, and financial records. Clean, organized, and transparent financials not only boost value but also inspire buyer confidence.
Action Step: Improve your profit margins, reduce debt, and eliminate unnecessary expenses. Implement sound financial reporting systems.

4. Systematize and Document Operations
A business that runs smoothly without its owner is far more attractive than one dependent on a single person. Systems create scalability and reduce perceived risk.
Action Step: Document key processes, create training manuals, and establish standard operating procedures (SOPs) across departments.

5. Build a Strong Management Team
A capable leadership team that can run the business in your absence adds significant value. It shows potential buyers that the business can thrive post-transition.
Action Step: Identify, train, and retain key personnel. Consider offering performance incentives or equity to keep them motivated and committed.

6. Diversify Your Customer Base
Over-reliance on a few clients can be a red flag. Buyers worry about what might happen if a major customer leaves.
Action Step: Expand your marketing efforts to attract new clients, and create a strategy to nurture and retain existing ones.

7. Protect Intellectual Property and Brand Assets
Your brand, trademarks, patents, customer lists, and proprietary systems are valuable assets. Protecting them can significantly increase your company’s appeal and value.
Action Step: Conduct an intellectual property audit and ensure all legal protections are in place.

8. Reduce Owner Dependency
If your name, face, or personal relationships are central to the business, it may be harder to sell. Buyers want a business, not a job.
Action Step: Gradually delegate responsibilities, and shift key relationships to other team members.

9. Address Legal and Compliance Issues
Unresolved legal issues or outdated licenses can derail a deal. Make sure your business is in full compliance.
Action Step: Review contracts, employee agreements, and regulatory filings with a legal advisor to ensure everything is current and enforceable.

10. Increase Recurring Revenue
Predictable, recurring income streams are incredibly attractive. They reduce risk and provide buyers with future cash flow certainty.
Action Step: Introduce or expand subscription models, service contracts, or maintenance agreements where possible.

Final Thought
Enhancing the value of your business before retirement isn’t just about a higher sale price—it’s about creating a legacy, protecting your life’s work, and setting up the next chapter for success. With careful planning and focused improvements, you can exit confidently and profitably, knowing you’ve set your business—and yourself—up for a bright future.

Managing Products and Services in QuickBooks Online

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Creating item and service records, tracking them, and using them in transactions

Customers may be the lifeblood of your business, but they wouldn’t exist without the products and services you sell. It doesn’t matter whether you’re a mineral specimen dealer who does one-off sales, a reseller who sells items you make or buy wholesale in large lots, or a provider of services. You must always know what you have available to offer buyers – goods, designing websites, or offering lawn care services in your community, for example.

QuickBooks Online can keep you in the know about what you have available to sell, and it can manage the forms and transactions you need to do business with your buying audience. If you were doing your accounting and customer management manually, you might be using index cards and large wall calendars and file folders stuffed with product lists and schedules. You’d spend a lot of time digging through item drawers and closets, counting your inventory by hand, and shuffling paper invoices and sales receipts and payment documentation.

Instead, what if all of that is automated, saving time, reducing errors, and increasing your chances of success? Here’s a quick look at some of the basics.

Are You Ready?

We’ve written about product and service management a lot. So you should know that to get ready to sell, you have to have made sure QuickBooks Online is set up to handle any inventory you might have. Click the gear icon in the upper right corner and then click Account and settings under Your Company. Click Sales in the toolbar and scroll down to Products and services. Make sure the first, fourth, and fifth options are turned on, as pictured below (the other two are optional). If they’re not, click the pencil icon in the upper right corner and change them. Be sure to click Save when you’re finished, then Done in the lower right corner.
Make sure your Products and services settings are correct.

Have you created your product and service records? You can do this on the fly as you’re entering transactions, but it’s much better to do it ahead of time. That way, too, you’re not as likely to skip the details, which will be important later on when you’re running reports, for example. We’ve gone over the steps before. Click New in the upper left corner, then Add product/service under Other. A vertical panel slides out from the right, and you simply select from options and enter data. 

Warning: Be very precise when you’re dealing with inventory information. If you haven’t gone through this process before, it might be worth scheduling a session with us to go over this important step.

Using Your Records in Transactions

Let’s go through the process of entering a sales receipt. Click New in the upper left corner, and then Sales receipt under Customers. . Choose a Customer from the drop-down list and complete any other fields necessary in the upper section of the form. Select the Service Date in the first column by clicking the calendar, then select the Product/Service in the next column (or click + Add new). The Description should fill in automatically.

QuickBooks Online provides inventory information as you’re completing sales forms.

The QTY (quantity) defaults to 1. If you mouse over or click in that field, a small window will pop up containing numbers for Qty. on hand and Reorder point, as pictured above.

Tip: If you know that you have more in stock that is showing, you can cancel out of the transaction, find the item record in the list on the Products & services page, and click Edit at the end of the row. You’ll be able to adjust the quantity or the starting value. Be very careful with this. Please contact us if you’re not very confident about how to handle this.

Enter any additional items and/or services needed and save the transaction.

The Products and Services Page

QuickBooks Online offers numerous reports related to products and services and inventory tracking (you’ll find them under Reports | Sales and customers), but you can learn a lot from the Product and Service page (Sales | Products and Services). At the top of the screen (where you can’t miss them) are two colored circles containing the number of items that are Low Stock or Out of Stock. 

This important information appears at the top of the Products and Services page.

Click on either of these, and the list below will change to only display these items. You can get a lot of information about your products and services on this page, including Sales Price and Cost, Qty On Hand, and Reorder Point. You can also create new records or import databases of records in CSV, Excel, and Google Sheet format. We can help you prepare to do this.

Your business depends on accurate, real-time information about your inventory, and QuickBooks Online can supply it. This element of the site, though, requires precision and regular upkeep. If you’re struggling with it, let us step in and help. We’re available to troubleshoot one-time problems, but we can also take a more active role in your accounting.

What Is a 1031 Like-Kind Exchange?

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A 1031 like-kind exchange, named after Section 1031 of the Internal Revenue Code, allows investors to defer capital gains taxes when exchanging one investment property for another of like kind. This tax-deferral strategy is widely used by real estate investors to grow their portfolios and optimize their tax liabilities.

How Does a 1031 Exchange Work?

A 1031 exchange enables property owners to sell a qualified investment or business property and reinvest the proceeds into another like-kind property while deferring capital gains taxes. The process involves several key steps:

  1. Sell a Qualified Property – The property being sold must be held for investment or business purposes.
  2. Identify a Replacement Property – The investor must identify potential replacement properties within 45 days of the sale.
  3. Use a Qualified Intermediary (QI) – A QI facilitates the transaction by holding the proceeds from the sale until the new property is purchased.
  4. Complete the Exchange Within 180 Days – The acquisition of the new property must be completed within 180 days of selling the original property.

Benefits of a 1031 Exchange

  • Tax Deferral – Investors can defer capital gains taxes, allowing them to reinvest more capital into new properties.
  • Portfolio Growth – By continuously leveraging 1031 exchanges, investors can upgrade and diversify their real estate holdings.
  • Wealth Preservation – Since capital gains taxes are deferred, investors can preserve more of their wealth and maximize long-term returns.

Rules and Restrictions

  • Like-Kind Property Requirement – The exchanged properties must be similar in nature and use, though they do not need to be identical.
  • Strict Timeframes – The 45-day identification period and 180-day exchange period must be strictly followed.
  • Qualified Use – Both the relinquished and replacement properties must be held for investment or business purposes.

Conclusion

A 1031 like-kind exchange is a powerful tool for real estate investors looking to defer taxes, grow their portfolios, and preserve wealth. Understanding the requirements and working with experienced tax and legal professionals can help ensure a successful exchange and compliance with IRS regulations.

The Benefits of Hiring a Professional Tax Advisor

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Navigating the complexities of tax laws can be challenging for business owners and individuals alike. While it may be tempting to handle tax matters independently, hiring a professional tax advisor can offer significant advantages. Here’s a closer look at the benefits of working with tax professionals and when it’s essential to seek their expertise.

Advantages of Hiring a Professional Tax Advisor

  • Expert Knowledge and Experience: Tax professionals possess specialized knowledge of current tax laws, regulations, and compliance requirements. They stay up-to-date with changes in legislation and can help you navigate complex tax issues effectively, ensuring you’re informed about the latest deductions and credits available.
  • Maximizing Deductions and Credits: A tax advisor can identify potential deductions and credits that you may not be aware of, helping you reduce your tax liability. Their expertise ensures that you take full advantage of available opportunities, potentially saving you significant amounts of money.
  • Personalized Tax Strategies: Every business and individual has unique financial situations. A tax advisor can create tailored tax strategies that align with your specific goals and circumstances. This personalized approach can enhance your overall financial planning and long-term success.
  • Avoiding Mistakes and Penalties: Tax laws are intricate, and even minor errors in tax filings can lead to costly penalties and audits. Professional tax advisors are meticulous in their work, minimizing the risk of mistakes and ensuring compliance with all tax obligations, thus providing peace of mind.
  • Time Savings: Preparing taxes can be time-consuming, especially for busy business owners. Hiring a tax advisor allows you to focus on running your business while they handle the complexities of tax preparation. This time savings can translate into improved productivity and efficiency.
  • Audit Support: In the event of an audit, having a tax professional on your side can be invaluable. They can represent you, handle communications with tax authorities, and ensure that all necessary documentation is prepared, reducing stress during what can be a challenging process.
  • Financial Planning Support: Beyond tax preparation, many tax advisors offer broader financial planning services. They can help you plan for future tax liabilities, retirement, investments, and estate planning, ensuring a holistic approach to your financial health.

When to Seek Professional Help

While it’s beneficial to have a tax advisor for most businesses and individuals, there are specific situations when their expertise is particularly crucial:

  • Starting a New Business: Understanding the tax implications of different business structures and setting up proper accounting practices is vital for new business owners.
  • Significant Life Changes: Events such as marriage, divorce, inheritance, or the birth of a child can impact your tax situation, making it essential to seek professional advice.
  • Complex Financial Situations: If you have multiple income streams, investments, or assets, a tax advisor can help you manage these complexities effectively.
  • Ownership of Rental Properties or Investments: Tax implications for real estate and investment income can be intricate; professional guidance can optimize your tax strategy.
  • Preparing for an Audit: If you receive notice of an audit from the IRS, consulting a tax advisor immediately is crucial for navigating the process.
  • Major Changes in Tax Law: Following significant tax law changes, seeking advice can ensure that you’re compliant and taking advantage of new opportunities.

Conclusion

Hiring a professional tax advisor offers numerous benefits, from maximizing deductions to providing personalized strategies tailored to your unique situation. While some may choose to handle their own taxes, the expertise and support of a tax professional can lead to substantial financial savings and peace of mind. If you find yourself facing complex tax issues or significant life changes, consider enlisting the help of a qualified tax advisor to ensure your financial success.