Do you handle cold, hard cash in your business? If so, you need a petty cash log!
A petty cash log will help you keep track of all the tiny transactions in your business so you can know exactly how much you have to work with. Here’s how to start one.
What Is Petty Cash?
Petty cash is pretty much what it sounds like: small amounts of cash you use in your business. You might use it for small purchases on the go, making change for customers, or accepting payment from customers who’d rather pay in cash.
What Is a Petty Cash Log?
Just like any of the other money in your business, petty cash needs to be tracked carefully. While these small payments might not seem important now, they add up! Your petty cash log helps you keep track of all the cash entering and leaving your business so you can properly enter the amounts in your bookkeeping software.
How to Start a Petty Cash Log
If you manage any amount of cash in your business, here’s how to get started with a petty cash log:
STEP 1: Decide how you’re going to handle physical cash.
If you’re going to handle physical cash in your business, you need to figure out how you’re going to keep it organized and safe. If you have a storefront, a lockable cash register is an easy choice. If you work on the go (at craft fairs, etc.), you might be better off with a lockable cash box.
Whatever you choose, make sure you also have a safe place to keep excess cash, like a safe or lockbox.
STEP 2: Determine your “float” amount.
If you’re accepting cash, you’ll probably have to make change at some point. This means you’ll have to start your petty cash box (literal or figurative) with some cash, called your “float.”
Depending on how often you have to give customers change, you might start with a $50 or $100 float. Just be careful not to keep too much cash in the box at once. You never know what could happen!
STEP 3: Start tracking!
Now that you’ve got some cash to work with, it’s time to start tracking! Every time you receive or give out cash, track it in your petty cash log. Make sure to mark the date, write a note about what the payment was for, and keep track of your running balance.
If your cash box gets too full, move the excess money into your safe and make a note on your cash log. (There’s nothing like that end-of-the-night panic when you don’t have as much cash in your box as you think you should!)
STEP 4: Top-up your petty cash.
At the end of the week or month (depending on your money management routine), you’ll want to deposit your petty cash in the bank. Refer back to your float amount, and deposit anything over that into the bank.
So if your float amount was $100 and you have $800 in petty cash, you’ll deposit the excess $700 into your bank account. That way, you can head into the next week/month with a fresh start!
After you’ve deposited that money, track it in Quickbooks! I recommend making a note on the deposit to remind you that it was petty cash.
Ready to get organized?
Ready to start your own petty cash log? Click here for a free copy of my Google Sheet petty cash log, and get to tracking!
And if you really want to get on top of your business finances and gain confidence in your money management skills, join the waitlist for my program Be Your Own Bookkeeper.
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