Image courtesy of Stuart Miles at FreeDigitalPhotos.net
Despite regular reminders to small business owners about the need to carefully track expenses, cash payments (petty cash) are often easily overlooked or forgotten. Why? Two main reasons:
The consequence? Cash withdrawals cannot be accounted for (higher risk of denied deductions in the event of an audit and/or theft), tax deductions may go unclaimed and higher taxes result.
- At the time of purchase, always ask vendors for cash receipts and note on the receipt what the item is, plus any other important details of the purchase
- Subscribe to an expense management service such as ReceiptBank.com or Bill.com that allows for photos of receipts to be submitted via an app
- If you do not subscribe to an expense management service such as noted above, have an envelope or area in a wallet or purse where receipts are consistently placed until returned to the accountant/bookkeeper
- Immediately upon return to the office submit the receipt(s) to the accountant/bookkeeper
The expense of an expense management service may seem to be a roadblock to some small business owners. However, by using an expense management service, the following benefits will be had:
- Data entry is simplified or lessened, leading to lower bookkeeping expenses
- A permanent digital record of the receipt is created, so there is no need to retain the original paper receipt, removing the need for files, file cabinets, scanning or other storage methods
- 24/7 access for employees to upload and/or manage expenses incurred (whether cash or other types of expenses)
- Less lost time spent by the bookkeeper/accountant waiting for receipts to be submitted
To learn more about simplifying your process for managing cash and other expenditures using expense management services, please contact us now for more information. Also, check out the videos on the Resources page!