If you pay with cash or get paid in cash you'll want to follow these steps for accounting for it.
In the world of accounting, cash is just another 'account'. That is, an imaginary box that records inputs and outputs.
So if you get paid in cash, you'll need a place to record that in your accounting software.
Likewise, if you paid an expense using cash and want to deduct it from your taxes, you'll need a way to record that.
So the first step is to create a new bank account in your Chart of Accounts called Cash. The steps are:
- From Chart of Accounts, click on 'Create a Bank Account
- Set the Account Type to: 'Bank and liquid assets'
- Set the toggle button 'Bank account' to on in order that...
- Set the toggle button 'Enable payments to this account' to on in order that...
The setup page will look like this:
Getting paid in cash
If you received money for an invoice in cash:
- Click on the invoice that was paid with cash
- Click on Enter payment
- Choose your new Cash account to pay it
Paying for stuff with cash
What if you paid for lunch with a business associate at a cash-only food cart? Here's how to deal with that:
- Upload the receipt for the lunch in the Bills section, either with the mobile app or in your browser
- Click on the Draft Bills and select the one you just uploaded
- Fill in the expense details and mark it as paid. Remember to pay it out of the Cash account as shown
4. Approve the bill