Bookkeeping advice for small businesses owners
In today’s business world, most companies no longer deal with large cash transactions. They either use electronic banking, lockbox or checks. However, in some industries, cash transactions may still occur: re-sale of used equipment, used cars, restaurants and such.
When handling large volumes of cash, there are two main issues that business owners need to worry about with their business bookkeeping:
- Internal controls to track transactions and prevent loss of money
- Anti-money laundering act
This article will focus on the first. However, it is important to note that cash intensive businesses need to be wary of receiving requests to be paid with large receipts in cash. If the customer requesting to pay cash only (generally for amounts over $10,000) seems suspect, a business owner can consult www.fincen.gov for ways to deal with suspicious financial activities.
In terms of internal controls for a business that deals with cash receipt transactions, the following are some basic small business bookkeeping tasks to help ensure your hard earned money does not go astray:
- While this might sound obvious, make sure you hire trustworthy employees. Conduct background checks and verify employment history.
- Do not allow one person to have complete control over cash transactions. Make sure two people are involved in any cash handling transaction, whenever possible.
- If you cannot make a bank deposit of your cash immediately, place all cash in a designated secure location.
- If you must keep cash on location, keep the minimum amount needed at your office by making regular bank deposits.
- Make immediate records of cash received and spent. Regularly compare the amounts reported on deposit slips to your bank statement to your general ledger.
- Investigate cash differences as soon as you discover them, because if you do not, over time, even small cash differences can add up to large losses if the source of differences is not uncovered and resolved.
Finally, an important component to handling and managing volumes of cash in your business is to train your staff on the bookkeeping tips listed above. When your staff is made clearly aware of the steps and importance of handling cash it also makes them safer. To get more helpful bookkeeping advice visit our blog where we discuss this and more on Tulsa bookkeeping.
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