This informal method of cash receipts and disbursements
needs to be formalized. The bookkeeping system does not need to be complicated.
In most cases, you can continue to operate much as you have. You just need to
do it in a way that leaves a few more tracks.
For example, make all purchases by check. The small
miscellaneous cash paid-outs from your pocket (or the petty cash box) are
reimbursed by a check with a listing of the expense codes. All your cash
receipts are deposited into the bank. No more taking cash from the till for
lunches, supplies, etc.
If all the money received by the business is deposited into
the bank and all expenses are paid by a company check, the proper journal
entries are easy to create from the bank statement.
If you are starting a new business, don't wait until the end
of the year and surprise your accountant with a box of miscellaneous receipts.
That is the most expensive and least effective use of your accounting
information. In addition to setting up the proper record system, your
accountant will provide you with guidance on other business, financial, and tax
due dates and obligations.
