Three (for starters) Good Reasons Why Your Business Needs a Policy Manual

Ask any business owner if they have a good, up to date policies and procedures manual and the eyes get that far away look and her thinking moves on to much more exciting thoughts. Let’s try to refocus on the subject by talking about more money that can be thrown to the wind faster than that GEICO motorcycle money man riding through a hurricane.

Case #1 – States are losing a significant amount of revenue through uncollected sales and use taxes. There are all sorts of numbers floating around, but the lowest is in the tens of billions of dollars range. So guess what? There is an increased effort (spelled audit) of businesses to find and collect these unpaid taxes. A workshop on the subject I recently attended says one of the first questions from the auditor may very well be “Can I see your use tax policy?” Bad audit findings can cost lots and lots of money.

Case #2 – The IRS has issued final regulations on allowing businesses to expense versus capitalize certain purchases under a de-minimis rule of up to $500 per item, no limit for taxpayers (without getting into the weeds, most small businesses) having an accounting procedure in place at the beginning of the tax year. Be prepared when the auditor wants to see that procedure.

Case #3 – I had a contract that was monitored for five years by the state. Each year, a week was spent on my site going through my books. A Policy and Procedures Manual in a binder with tabs for things like Employee Handbook, Travel, and Cost Allocation Policy became the standard to follow and just made life much easier during the year by following the book. Better to know up front what expenses will not be allowed and plan accordingly.

As boring and unglamorous as developing a policy and procedures manual may be, begin building (this takes time) a policy manual that everyone can follow and where everyone knows the rules. And stop the hundred dollar bills flying off your businesses motorcycle jacket.

 

OLYMPUS DIGITAL CAMERAAbout the Author: Ron Miaso, one of the QuickBooks Yoopers, is a Certified QuickBooks ProAdvisor in Desktop and Online and before forming Delta Business Solutions was a Senior Finance Manager in the auto industry where he managed a $500 million annual operating budget and helped develop long range business plans.

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