How to Spot Payroll Fraud

Essential Steps To Spot Payroll Fraud

Quick Ways To Spot Payroll Fraudsters

Payroll fraud is a constant problem for firms with fewer than 99 employees, claims Fiducial, a franchiser of small-business accounting and financial service firms.

These firms represent 39% of fraud cases with an average $127,500 lost in each incident.

Fiducial attributes the losses to lack of controls—e.g., one employee writes and signs the checks, manages and reconciles bank statements, handles payroll and keeps the books.
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Fiducial suggests watching for these signs:

  • Unusual spikes in checks presented for payment
  • A payroll service delivering multiple packages during the payroll period
  • A payroll service paying unusually high federal or state payroll taxes
  • Do you have Employees or Independent Contractors – Find out HERE

Recommended Payroll Fraud Prevention Steps:

  • Review bank statements for unfamiliar third-party fees;
  • Check bank statements online at least twice a month;
  • Do background checks on new employees; and
  • Set up controls—e.g., one employee enters data and another reviews it.

Payroll Software:

(Copyright: The American Institute of Professional Bookkeepers, VOL. 2: Issue 20)

2 comments

  1. I can’t push you past fear, jeej, You’ll have to figure that one out on your own. There is comfort in employment, so keep your job (whether it be full time or part time), until you are prepared and ready to give it up. but only give it up if you are earning a full time income to support you and your family, otherwise you will shoot yourself in the foot.
    There is no greater reward than having your own business, but there is also no greater investment. Until you can afford to hire employees – There are 8 payroll taxes you must pay for each employee – you must be prepared to meet your payroll expenses and file your payroll paperwork – you’ll need help with that and a payroll service or a bookkeeper might be out of your range right at first.
    Moving slowly will take the rest of your life – Jump in with both feet and mess up the water. Know your competition and whether or not you can compete with those people and businesses. Join a networking group. Set up a website. create a FaceBook Fan Page, Join twitter, Linked In, as well as many others out there. Build a community of people who will buy from YOU. Set your wheels in motion – Create energy and enthusiasm about your product – Sell Yourself. BE THAT PERSON who other people see as a knowledgeable expert – It doesn’t matter what age you start, . . . JUST START! Anywhere, Just start! Perpetual motion will propel you forward – Babe Ruth said that, “It’s hard to beat someone who never gives up.” BE THAT PERSON!

  2. Thanks for this post just in time for me!I think what I need is courage to move on.I have a few friends who offered to invest in my jewelry business, and I have plans to outsource some of the steps of my business at some point. I know that I have to do it sooner or later, but I am afraid. What if I loose my friend’s money and I can pay back the debt in the other half of my life?I always had some sort of (full time or part time) fix job that served as the basis for my living expenses, and I am afraid to give it up.On the other hand I do understand and experienced it that the more you put into your business, the more you get back – on every level.So this is why I am stuck, or better said, I am moving quite slowly.
    Any advice? I would truly appreciate it

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