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