Risk is not something to eliminate — it is something to understand, quantify, and manage. Every business carries risk. The businesses that fail are not the ones that took risks; they’re the ones that didn’t know what risks they were carrying until one of them materialized.
FJ & Associates, PLLC brings a CPA’s perspective to business risk management — identifying financial, tax, compliance, and operational risks that most small business owners don’t know they’re carrying, and building practical mitigation strategies before those risks become crises.
Want a risk assessment for your business? Call (801) 927-1337 or email admin@cpaone.net.
The Four Risk Categories We Assess
1. Financial Risk
The risks embedded in your balance sheet, cash flow structure, and capital position:
- Liquidity risk — insufficient cash or credit to meet short-term obligations during a revenue dip or unexpected expense
- Concentration risk — too much revenue from a single customer, or too much cost from a single supplier
- Leverage risk — debt service obligations that leave inadequate margin for error
- Working capital risk — cash conversion cycle longer than your payment terms can sustain during growth
- Owner-dependency risk — the business’s revenue or client relationships are inseparable from the owner’s personal involvement; the business has no value without the owner present
We identify these through financial statement analysis, cash flow modeling, and review of your customer and vendor concentration.
2. Tax and Compliance Risk
The risks that come from IRS and state tax exposure:
- Worker misclassification — treating employees as independent contractors to avoid payroll tax; triggers back taxes, penalties, and personal liability
- Unreported income — cash transactions, platform income (1099-K), or barter arrangements not properly reported
- Entity structure mismatch — operating as a sole prop or LLC without considering S-Corp election; paying unnecessary self-employment tax
- Sales tax nexus — selling across state lines without registering for sales tax in states where you have nexus
- Payroll deposit failures — late federal tax deposits generating compounding IRS penalties
- Missing estimated tax payments — particularly for business owners and S-Corp shareholders who underestimate quarterly obligations
See our Utah tax resolution services and payroll compliance guidance for how we address identified exposures.
3. Operational Risk
The risks embedded in your people, processes, and systems:
- Key-person dependency — one employee who holds critical relationships, knowledge, or skills with no succession plan
- Internal fraud exposure — no segregation of duties; one person controlling cash, bookkeeping, and bank access
- Data loss risk — no backup system for financial records, client data, or intellectual property
- Contract and liability gaps — verbal agreements, no written contracts, inadequate limitation-of-liability clauses
- Uninsured exposures — business interruption, professional liability, cyber liability, or D&O coverage gaps
4. Regulatory and Industry Risk
- Licensing and certification lapses
- Industry-specific regulatory changes (tax law, employment law, environmental)
- OSHA compliance for employers with physical operations
- ACA employer mandate tracking as headcount grows
Internal Controls: The First Line of Financial Risk Defense
The most common source of small business financial loss is not external — it is internal. Employee theft, embezzlement, and undetected billing errors are far more common than most business owners believe. The Association of Certified Fraud Examiners reports that small businesses (under 100 employees) are the most frequent victims of occupational fraud, with median losses of $150,000 per incident.
The mechanism is almost always the same: one person had too much unchecked access to financial processes. We assess your internal control environment and identify segregation of duties gaps:
Common internal control weaknesses:
- The person who receives and processes customer payments also prepares the bank reconciliation
- One employee has sole authority to approve and pay vendor invoices
- Payroll is processed by someone who can also add employees to the system
- Blank check stock is accessible without adequate controls
- Owner does not review bank statements independently of the bookkeeper
We recommend practical compensating controls scaled to your team size — many of which require only 30 minutes per month of owner review time.
Cash Flow Risk: The Silent Business Killer
More profitable businesses fail from cash flow problems than from operating losses. Common cash flow risk factors:
- Seasonal revenue with fixed cost obligations — cash is tight every January; no line of credit exists to bridge it
- Slow collections — 60-day DSO on 30-day terms means the business is financing 30 days of customer obligations at zero interest
- Rapid growth — scaling requires cash before revenue catches up; undercapitalized growth creates a cash crisis in a growing business
- Debt balloon payments — loans with lump-sum maturities that exceed available cash reserves
We build 13-week rolling cash flow forecasts that surface these risks before they become emergencies — and maintain a banking relationship that allows access to capital when needed. See our fractional CFO services and financial forecasting for how this integrates into ongoing financial management.
Business Continuity Planning
What happens to your business if you’re unable to work for 90 days? For most small businesses, the answer is: it stops. Business continuity planning addresses:
- Key-person life insurance — protects the business (and business loan guarantees) against the death of a principal
- Disability buy-sell funding — ensures a partner’s disability interest can be purchased without destroying the remaining business
- Documented processes — operating procedures written down so the business can continue without the person who holds the knowledge
- Succession identification — a plan for who leads the business in the short term if the owner is incapacitated
We coordinate business continuity planning with your insurance advisors and attorneys, providing the financial analysis and entity structure review that supports the legal documents.
What Our Risk Management Clients Discover
Common findings in a risk assessment engagement:
- A business with $1.8M revenue and one customer representing 45% of it — unrecognized concentration risk
- A bookkeeper with unchecked access to both accounts payable and bank reconciliation — potential fraud exposure undiscovered for years
- An S-Corp paying the owner $30,000 in salary on $400,000 in net income — significant IRS reasonable compensation risk
- No business interruption insurance and a lease with 4 years remaining — owner disability would create immediate financial crisis
Know What You’re Carrying Before It Finds You
The risks in your business exist whether you know about them or not. A structured risk assessment gives you a clear picture of your exposure and a practical plan to reduce it — before one of those risks becomes an emergency.
Call (801) 927-1337 | Email admin@cpaone.net | 612 N Kays Dr Suite 120, Kaysville, UT 84037
Related Services:
- Fractional CFO Services
- Audits & Assurance Services
- Payroll Compliance & Labor Law
- Exit Strategy & Business Sale Planning
- Business Restructuring Advisory
Author Bio | Missy Dennis, CPA | Partner | FJ & Associates, PLLC | Kaysville, Utah
Missy holds a Master of Accounting degree from the University of Utah and is a licensed Certified Public Accountant. She is committed to providing clear, accurate, and actionable guidance so clients can navigate complex financial decisions with confidence. With more than twenty years of public accounting experience, Missy Dennis specializes in: Tax preparation and tax advisory; Bookkeeping strategy alignment; Estate and trust taxation; Audit and consulting services; Low-income housing tax credits; Non-profit accounting; Small- and mid-sized business advisory.
