The Law Firm of Lan Quoc Nguyen & Associates
The Law Firm of Lan Quoc Nguyen & Associates

800-505-1238
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800-505-1238
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Are you keeping proper records for your cash transactions?

| Feb 26, 2020 | Uncategorized |

Running any type of business involves a lot of recordkeeping. Having financial documents, transaction receipts and other information relating to the incoming and outgoing funds of the business can be immensely useful in the event that a dispute arises. While most people use debit or credit cards for their purchases these days, you may have a California business that is heavily cash-based.

Cash is still an immensely useful way to buy products or services, and you may appreciate clients or customers who pay in cash and use cash as often as you can yourself. However, it is important that you maintain proper cash records for your transactions.

Tips for recordkeeping

You may have your own method for recordkeeping that you believe works for you and your business. However, if you have an organized-chaos type of method, it may not be as useful to you in the event of a dispute. As a result, it may be worthwhile to consider the following recordkeeping tips:

  • Have an electronic recordkeeping system or a physical journal that allows you to detail cash transactions and records
  • Choose a system or journal that suits the needs of your company, which can depend on the complexity or simplicity of your transactions.
  • Label your record rows and columns to show how to organize the information. Accounts, sub-accounts, types of payments, operating expenses and merchandise purchases could all act as necessary labels.
  • Ensure that you have columns to record the dates of the transactions and whether they are credits or debits. A brief description of the transaction may also help.
  • Make sure to record each transaction correctly and when it takes place. Trying to catch up on records later could lead to incorrect information.
  • Maintain receipts for the transactions, which can act as another type of evidence to back up your records.

Though you may hope that you do not face any dispute over the finances of your business, it could happen. If you have a partner, claims could stem from him or her suspecting that money is missing or that some other unseemly event has taken place. Your records could help you fight back against such accusations. Of course, if a partnership dispute does arise over such matters, you may need to speak with a knowledgeable business law attorney who can help you defend against such claims while protecting your business.