How do I track Cash purchases?

It’s a common question:  "How do I track Cash purchases?"  

Theoretical example:  Let’s say we spend $10 on parking at an event that is 100 % business-related.   So, first let's focus on the SOURCE of that $10 -- where did it come from?   As a business owner, you know you have two potential sources of cash available to you on a daily basis:  Business Income or Personal Income.  If you're paying cash, that cash can only come from one of two sources.   Let’s also assume that you’ve withdrawn this cash from your Business Checking Account, and that this account has been linked to GoDaddy Bookkeeping automatically.  You withdrew $80.00 from the ATM, and GoDaddy Bookkeeping should show this ATM withdrawal as "Transfer Out" or “Personal Expense" from your Business Bank Account.   Now that GoDaddy Bookkeeping has correctly entered this ATM withdrawal as “not an Expense”, you can manually enter the $10 cash payment in your account as “Parking Expense”.  If it is entered as anything else, the expense would have been counted twice; which is wrong!

 

 

If you instead pay with cash from a Personal Bank Account, you'll want the ATM withdrawal category in GoDaddy Bookkeeping to be labeled "Personal Expense".  The entry in GoDaddy Bookkeeping would be the same as above *as long as the parking expense is business related*.  Remember that you cannot take deductions for personal expenses (say, Parking downtown to go shopping!) 

Personal expenses don't affect your Business P&L.   But if you use personal income to pay a business expense, you can definitely manually enter it in GoDaddy Bookkeeping.  Just be sure to save your receipts!  As you are out and about for the rest of your day, take note of any of the business related transactions you use the ATM withdrawal of $80.   

Finally, if at the end of the day you have $50 cash left and deposit it back into your bank account, be sure to categorize it as "Transfer In".  This will ensure you don't have it treated, as "Income," and that you don't owe income tax on it.  

Related: Why Doesn't Credit Card Payment show up as an Expense?

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