We are a partnership business that is currently operating on a cash only basis for both sales revenues and expenses, we do not use credit, checking or bank accounts. Do I record all transactions under Cash On Hand?
Yes.
May I ask why it's cash only, even for expenses? IRS likes to sniff these out.
We own a concession stand, and accept cash only for payment of goods. We currently have cash only terms with all of our vendors. We've only been in business for a couple of months, and we certainly don't intend to continue to operate under these circumstances. The way it's been going is that as soon as we have revenue, we have to immediately restock inventory and pay expenses. We don't have employees at this time, so no payroll to worry about. Once things settle down and we have enough revenue left over after paying expenses, we are will get our butts down to the bank and open a business account. We could use personal money to do this, but, why do that when the company is self sufficient? I fully understand the suspicions raised when it comes to cash only businesses, but all my t's are crossed and i's dotted. I don't want any issues or concerns about our balances.
Get (and keep) receipts from all your vendors.
If you were to be audited, one of the ways you could demonstrate that you're reporting all your sales would be by multiplying [the quantity purchased for each item (shown on the receipts above) less inventory on hand at period-end] by the posted selling price for each item, and showing that the total equaled your reported sales (with some reasonable allowance for wastage).
You'll want to be sure you're in compliance with the sales tax rules, too.
Oh yes, I have every single receipt as well as beginning and ending inventory counts for each and every event. I, just to be on the cautious side, have kept all of the order slips we write on when a customer places an order, showing what exactly was purchased, since we don't have a cash register. As for sales tax, our bottled water and baked good sales are non taxable, so we make sure that the sale of those items are closely monitored, in fact, no one is allowed to have either of these, unless it's a paying customer. Our kids help out at the stand from time to time, and they know these are off limits! Again, hopefully within the next few weeks we'll have a business account, until then, it's all cash, which seriously makes my nervous!
My compliments! For a cash-only startup business, you seem to be doing it about well as it can possibly be done.
