Many businesses benefit from having some petty cash on hand for those occasions when cash is required, or simpler.
If your business handles petty cash, we have several recommendations on how to best track that petty cash, as follows:
- Establish a set amount of petty cash you need to have on hand. Keep enough to cover several months’ worth of the kind of expenses you expect to pay out of petty cash.
- Store your petty cash in a secure location and designate one person to manage it. A lockbox or drawer with a lock is perfect for this. If you are solo, consider designating a separate wallet just for petty cash!
- Always make sure every time petty cash is used, a receipt is collected. Store the receipt in the petty cash drawer or wallet. That means the total of cash and receipts should always be the established petty cash balance. You’ll know when you need to replenish the petty cash when the cash is almost gone, and it’s mostly receipts.
- Create a bank account in QuickBooks Online and name it “Petty Cash”. Whenever you withdraw cash from your main checking account, you can post it here as a deposit. You can also record receipts either when you incur them, or when you reconcile the petty cash periodically.
Remember, petty cash is merely a convenience to the business. The monies in petty cash should still be used for business expenses and will be treated just like any other business expenses. So make sure you track your petty cash!
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