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Business Tax Tips – Good Petty Cash Management for Business – Setting Up and Recording in the Accounts

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Good Petty Cash Management for Business – Setting Up and recording in the accounts

Good Petty Cash Management for Business – Setting Up and recording in the accounts

Most small businesses make small cash purchases. If yours does, set up a Petty Cash Box to keep control of those purchases. Get yourself a metal cash box, go to the bank and withdraw say $100 – ask for it in a selection of notes and coins.  The value of this box should remain at $100.00 at all times.

When you, or an employee, need to buy a small item, eg. a notebook at the local office supply store for $7.00, if you take $20 from the Petty Cash Box (good to use one of the plastic money bags the bank uses to bundle coins to hold the cash), when you get back to the office you will put your receipt and any change in the box. Now you should have $93.00 in notes/coins and one receipt for $7.00. The value of your box is still $100.00.
You continue using the Petty Cash Box in the same manner until you get low on cash. Then replenish the box by withdrawing cash at the bank for either enough to get back to $100 , or the full $100 if all is spent.

In your accounting records, there should be a credit from the Bank Account, and a debit to the Petty Cash Account. Then record each expense going by the receipts, crediting the Petty Cash Account (“spending” the cash) and debiting the relevant expense account, eg stationery/office supplies, fuel, staff amenities (tea, coffee, etc).

If there are several receipts for the same expense type, eg. staff amenities, you could total them all ,staple together and record the total in the accounts, with a memo such as “total fuel several receipts”.

What tips do you have? Share them with us here!

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Author: accountkeepingplus

Administration, bookkeeping and compliance for small business, Training, trouble-shooting, or we can do the books and payroll for you! Self Managed Superannuation Fund Service Provider, free support MYOB Certified Consultant, Reckon/QuickBooks Professional Partner.

One thought on “Business Tax Tips – Good Petty Cash Management for Business – Setting Up and Recording in the Accounts

  1. Thanks for sharing this info on petty cash management – its a good way to manage those small expenses and is worth learning how to set up.

    Like

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