Handling Cash Expenses... - Machine Underground -Tractor & Commercial Equipment Discussion Forum

Dougster · 06-14-2008, 01:42 PM

The poor old Dougster has never been very good about the logistics of handling small everyday cash expenses for the business that cannot be charged. No, I don't carry a giant business checkbook with me like some construction folks I see. I gave up writing checks by hand long, long ago. Yes, I keep all my cash receipts... and yes, at a minimum I record everything in my daily log for later tally... but I have a nagging suspicion that I am not handling these expenses by the book... i.e., in a way the IRS would prefer to see.

I've never figured out a good, understandable way to handle such small cash expenses in QuickBooks (yes, I am thick as a brick in this regard... so I do all expense recording in Excel)... and I do not keep a business "Petty Cash" box (or bag) in my house or truck to draw from (I'm way too poor to have a box of cash just sitting around). Rather, I have a very bad habit of paying all of these small cash business expenses out of my personal expense budget (i.e., my own pathetic wallet: food, gas money, etc.) which, in turn, is ultimately replenished like all my other personal expenses: from my dwindling savings while the business continues to sputter and operate at a net loss.

I am a sole proprietor... so it is entirely possible that none of this really matters. Still, I feel I should be operating as if I had a corporation just to keep the IRS happy. And so I ask the business folks here: How should I be handling small, business-related, cash expenses?

Dougster™

**LoneCowboy** · 06-14-2008, 08:11 PM

Credit card

I really can't think of one thing that has required me to use cash (instead of a check or credit card) in a long long time. (ok, buying used stuff off craigslist)

Ok, in that instance, I just put down my $100 as an expense for whatever, and a $100 credit in Paid In Capital.
I can then pay myself back the Paid In Capital because I didn't use business money to do it originally.

but seriously, you shouldn't use cash for 90% of this stuff. Just throw it on the business credit card.

**Ducati996** · 06-14-2008, 08:29 PM

At least with Amex you get it itemized and the end of the year, in case you lost the receipts

**PaulChristenson** · 06-14-2008, 10:36 PM

Whatever you do...do NOT commingle the CASH...

Dougster · 06-14-2008, 10:45 PM

Quote:

Originally Posted by LoneCowboy

but seriously, you shouldn't use cash for 90% of this stuff. Just throw it on the business credit card.

Historically, about 97.2% of business expenses go on the business credit card or are paid for via ACH or bank check from my business bank. I simply do not *write* checks anymore... business, personal or otherwise. In fact, I do not even own a supply of checks for my business checking account.

I never even bothered to order any.

But lately, the number and amount of purchases that must be made in cash has increased... hence my concern about making sure it is done right and in a way that passes IRS muster.

Dougster™

Dougster · 06-14-2008, 10:48 PM

Quote:

Originally Posted by Ducati996

At least with Amex you get it itemized and the end of the year, in case you lost the receipts

Same with my business credit card. I am extremely pleased with the way I can download fully detailed reports any time I wish!

Dougster™

SkunkWerX · 06-15-2008, 09:20 AM

Using personal cash for business = bad. Unless you document the transaction in your ledger, (and it sounds like you are not an enjoyer of book keeping.)

Well, let me preface, I would use personal cash all the time, but it was when I got paid in cash, paid it to myself, and then forked it back out for expenses. If you are running in th Red, you are precluded from "creative" money laundering.

What are you paying for using cash? I'm with Lone Cowboy, these days you can use credit almost everywhere? right?

Can you "cash advance" off of your business credit card?
Let's say you need to pay cash for fuel at the pumps, stop grab a cash advance/debit for the amount you expect to pay off of your card and use that cash. This way you are not mixing personal and business finances, and the cash advance is recorded.
Some places that don't take credit cards, will take the transaction as a direct debit off of your card.

Dougster · 06-15-2008, 10:01 AM

Quote:

Originally Posted by SkunkWerX

Using personal cash for business = bad. Unless you document the transaction in your ledger, (and it sounds like you are not an enjoyer of book keeping.)

Well, let me preface, I would use personal cash all the time, but it was when I got paid in cash, paid it to myself, and then forked it back out for expenses. If you are running in the Red, you are precluded from "creative" money laundering.

What are you paying for using cash? I'm with Lone Cowboy, these days you can use credit almost everywhere? right?

Can you "cash advance" off of your business credit card?
Let's say you need to pay cash for fuel at the pumps, stop grab a cash advance/debit for the amount you expect to pay off of your card and use that cash. This way you are not mixing personal and business finances, and the cash advance is recorded.
Some places that don't take credit cards, will take the transaction as a direct debit off of your card.

Sadly, I failed Basic Bookkeeping 101... so I try to rely on QuickBooks as much as possible. And when that fails, I turn back to what I know best: Microsoft Excel. My entire existence is recorded on... and controlled by... a series of Excel spreadsheets.

And yes, in a business bleeding red in a big way, there is zero motivation to cook the books... unless I am trying to convince someone that I am not completely insane trying to keep the damn business alive.

But yes, "contributing" my own personal expense cash (i.e., money sourced from dwindling life savings) to my small cash business expenses is a losing proposition and problematic for a number of reasons. Offline, I've gotten some excellent advice (Thank You Mystery Member!) and it's clear there are better ways to handle this.

These "new" cash expenses are the result of my quest to lower operating costs. Rather than continuing to buy taxed diesel in town for the digging machines as needed, I now travel a couple towns over with a truck full of 5 gallon jugs and buy off-road diesel. But not being in a position to apply for a formal charge account with this supplier, I am forced to remain a COD customer. Likewise for a couple new lower cost materials sources and a new cheaper disposal site I found.

It isn't that I can't charge these things elsewhere if I am willing to pay more. It's happening as the result of a determined quest to keep my operating costs just as low as humanly possible.

Dougster™

**LoneCowboy** · 06-15-2008, 10:12 AM

You just need an equity account called "paid in capital"

look up help in quick books, it should be there.
that's how you handle what you are doing.
easy

Dougster · 06-15-2008, 11:03 AM

Quote:

Originally Posted by LoneCowboy

You just need an equity account called "paid in capital"

look up help in quick books, it should be there.
that's how you handle what you are doing.
easy

Thanks for the tip Lone. I'll check it out tonight!

Dougster™