3 Simple Reasons Every Small Business Should Keep a Cash Book
If you're a small business owner, you'll already understand the importance of hiring a professional tax accountant to keep your books in good order. This can be done by keeping detailed accounts by hand, but most modern small businesses use an online program that uploads everything from payments to invoices to the cloud for easy access.
However, one thing you might want to do is keep a cash book. These are still usually filled out by hand, and they come with several advantages. Essentially, a cash book keeps track of small cash purchases made for day-to-day items. If, for example, you need to run out and by some more ink for your printer, you can take the money from a small cash fund and then enter it on in your cash book.
Here are just three reasons why a cash book is well worth keeping.
1. Makes It Easier to Pay Your Taxes
When you maintain a cash book, it's very hard for those smaller purchases to slip through the gaps. That can be a problem when it comes to working out your taxes, since you won't have a good idea of your expenses, which generally means having to leave money on the table. A cash book can be set up so you can easily identify what taxes and other charges need to be associated with which payments.
2. Easy Cash Flow Breakdown
You probably have a pretty good idea of how much money your business is spending on a month-by-month basis and how much you currently have liquid – even if you don't, a quick look at the accounts can give you an estimate. However, it's only ever a rough estimate when you aren't keeping an eye on smaller purchases and entering them in a cash book. Doing so will let you know exactly how much cash you have, and you'll be better able to break down your income and expenses. That printer ink you went out to buy? Maybe a look at the cash book will show that you'll save a good sum by purchasing it in bulk.
3. Quickly Identify Mistakes or Theft
If you're not keeping track of small purchases in a well-ordered cash book, it could be that mistakes are being made concerning how money is spent. Additionally, any employ who wants to dip into that cash for their own advantage will be able to do so without the crime being identified for some time, if at all. When you keep a cash book, you'll be able to identify any mistakes or wrongdoing.