re: How to find out if the bookkeeper is embezzling?

When your CPA reviews her books prior to filing he/she should catch it very easily.

I doubt it's happening through payroll tax

It sounds like you have a relatively small business so I assume you don't have a ton of cash expenses but you need to set up a separate petty cash fund with say $500 in it, have it controlled by an independent person(someone who would never purchase something if possible and who doesn't need the money), set a limit on cash purchases without a receipt of say $50, and have that independent person keep a log of where the money is going with support. Periodically (once a week/month) you or another independent person should review the log and support and question/reprimand those who don't provide support

Never pay out of the register. Always, reconcile the register

Cash is the most susceptible asset and you need to know where it is going

Also, I'm surprised that the limit is as high as 5%. The legal limit may be 5% but I'd assume 5% each period could add up to a pretty substantial amount. I'd lower YOUR acceptable difference substantially

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since there seems to be no reconciliation other than hers.

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Most people use bookkeepers for the day to day and then a CPA to reconcile and file taxes.

We are pretty sure someone at my job is embezzling. They came to me (hr) and we are looking into it. The books arnt balancing and the accounts think they know why. The bad part is we have to prove that she knowingly did it. My company is a giant vigina about lawsuits.

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Payroll taxes are easy to find. If your bookkeeper is getting away with that, your internal controls are terrible.

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This. But most small business owners have no concept of internal controls.

That's not your company being a vagina. That's the law.

In order to prosecute you have to have proof beyond a reasonable doubt that she intended to defraud the company, which is a huge threshold in these kind of cases.

They might be right. One of my family's businesses was raped by embezzlement.

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I did say that but that appears not to be the problem from what I've read on here


"People assume you're talking about income tax. That's not all that is withheld.

If she controls disbursements in addition to the payroll process, she could do it easily, since there seems to be no reconciliation other than hers."




Thank you.

I don't know what state you are from, but in louisiana you don't have to have any reason to fire. You can get sued but they would have to prove you were discriminatory.