Do you have a Petty Cash Fund? If you have cash around the office for buying supplies or paying for a COD delivery, how do you keep track of that?
Most businesses can benefit from having a little cash around the office for small incidentals. The trick is to account for everything and keep it safe.
Here's my tips for a properly working system.
Now your fund is set up and ready to use.
Make sure it's used for actual business expenses, not personal use.
I want to talk about meals at this point. Any business lunches
should be documented as to date, persons attending, and business
purpose. Such as: 6/15/XX, myself, Jack Jones of Jordan's Expediting
Services, and Janice Joplin of Tulsa Packaging, purpose was to discuss
delivery needs for XYZ Customer. That lunch expense would be 50%
A business is allowed to supply a meal for employees if they are in the business location and working. These meals would be 100% deductible. Other business lunches are only 50% deductible. If on an ordinary day, you pull thru McDonald's on your way from one meeting to the next, that is not a business expense. Refer to the IRS website, www.irs.gov, for more details on meals and entertainment expenses.
Things I've seen the Petty Cash Fund used for include batteries for your computer mouse, office supplies (paper/pens/file folders), window cleaning, snow shoveling, and a holiday meal for the office workers.
Okay, so we've looked at how to set up your fund, now let's look at using the fund.
Once you gotten your cash box set up, here's the steps to take when you need to use some of that cash.
If you find your petty cash fund repeatedly short, as in when you add up your cash and receipts you don't get the initial amount of the fund, you need to do some thinking. Maybe you need to remind whoever has access to the cash box what the rules are. Use cash, put in a receipt. If necessary, take away access of the fund to anyone but you. Then you know you're the one not putting in the receipts!
Hopefully, as you use this process, it will get to be second nature and you'll always put in the receipts.
Each month, when you write your check to replenish the fund, keep the receipts with the check stub. If the description on the receipt isn't clear, write on the receipt what you purchased. This will be documentation for your business expenses.
Enter the check in your cash disbursements journal, if you're using a manual accounting system, or in your software system, if you're using a computer system.
That's all there is to it!
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