Let's first look at your personal money you use for business purchases. Let's say you go to staples and buy some pens. It only cost you $5 and so you don't think much about tossing the receipt into the garbage since it's such a small amount and couldn't possible affect your bottom line. Say you make three of those kinds of transactions a week, in one year that could add up to $780.00 a year in missed expenses. My husband always teases me that I usually spend $20 a day. In the end, those little receipts that you pay out of your own pocket, could mean revenue that you are taxed on that you shouldn't have been as well you are personally out $780 that you could have recouped from the company. My suggestion is to place a recipe box in the console of your car or even an envelope attached to your visor, so you can quickly place the receipts into filing right away as you leave the store and enter your vehicle. Many wives who do the bookkeeping for their husbands say that this has saved them from many an argument.
Next, petty cash. Petty cash is technically money that the company owns and is required to reconcile like any other bank account. There should be a starting balance, a listing and copies of all receipts and an ending balance that matches the cash on hand. Auditors do not like to see money going out of the company into petty cash and then not being accounted for. It will not be seen as an expense. If your company has a petty cash fund, then it needs to be managed properly. If you require further advice, please contact your accountant or bookkeeper and get on top of it before it becomes a mess.
When you are running a business the government most cares about the income that you claim. They aren't so worried if you paid $10 on postage and then never claimed it. It means more money in their pockets and less in yours. Be vigilant about all the expenses you are using towards your business. it matters.
Have an great day!
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