Record Keeping Basics
Tools for record keeping
Audit proof your business - Internal records
Summary of required documents
There are 2 common places business owners keep their cash:
- In the bank
- On hand
Cash in the bank
It is important you do not trust the bank to keep track of your balances. Banks do make mistakes (though not very often). You should have a system of recording every transaction you send to the bank. At the least use your checkbook to reconcile every deposit and withdrawal from the bank.
When you get your statement from the bank, be sure to reconcile with your checkbook.
Your true cash balance is determined as follows:
- Make sure your cash register is up to date
- Add any collections the bank received on your behalf
- Add any interest earned
- Subtract any bank charges
- Subtract bounced checks
After doing this, your bank balance should match your book balance.
Be sure to keep your bank statements and cash register as part of your business record.
Later we talk about using excel or accounting software to keep track of cash.
Cash on hand
If you keep cash on hand, we will need a safe place to keep the cash. Here are some tips to keeping track of cash on hand:
- Never leave cash in the open.
- Invest in a cash lock box.
- Be sure to count the balance at least once a week
- Have a cash register, where you keep track of additions and withdrawal to cash
- Unless you need large amounts of cash for your business, deposit your cash often to the bank.
Be sure to keep the cash register as part of your business record.