Petty Cash Book – Steps in operating one
Petty cash is a small amount of cash kept on hand to make day-to-day purchases for items that are too small to pay for by check or if you don’t have access to eftpos. Examples are expenses such as milk, coffee and tea, stationery, postage and taxi fares.
A petty cash book allows you to:
- keep track of small expenses so they don’t get forgotten about as tax deductions.
- keep the check account free of lots of small transactions.
- avoid paying for smaller items from personal funds.
- make purchases that are too small to be paid by check.
When setting up a petty cash book you’ll need:
- a petty cash tin or purse to keep money in.
- a petty cash book to record expenses.
To start using your petty cash system:
- Write out a check for cash, recording it on the check butt as “petty cash”. The first petty cash check can’t be claimed as an expense.
- Put the cash in the petty cash tin.
- Make sure you receive a receipt for each petty cash purchase. If a receipt is not issued make sure you record the details.
- Record the purchase, with the type of expense, in the petty cash book.
- Keep a running total.
- When your petty cash gets low, count the money in the tin and add up all purchases made. The total should equal the original petty cash amount. Write out a new check for cash to bring the petty cash back up to the original amount. Try to do this at least weekly if petty cash is used a lot.
Wagebook – How to keep it Whenever you employ someone, you have to keep their wage records for seven years. A good way to do this is to use a Wagebook.
Each payday, you have to complete these details for each employee:
- total gross earnings, including taxable allowances (this is the amount before Income Tax is deducted)
- the amount of Tax deductions
- child support deductions
- any student loan deductions
- any non-taxable allowances
- the net wage.
Non-taxable allowances will include actual expenses employees have incurred on behalf of the employer, such as meal, mileage, tool and telephone expenses.
Hints on using a Wage Book
- Start each tax year on a new page and give yourself space.
- Use a fresh page for each employee, even if they were only employed for one day. Include all wages for a full tax year in one book.
- Make sure you get new employees to complete their details.
- Summarise the details for each employee at the end of each tax deduction period in your wagebook. This will be either monthly or twice-monthly.