Organizing your Cash Receipts

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I prefer to pay cash for all my expenses, because it is simpler for me to keep track of my own expenses, and record them in my own computerized financial statements. I am my own “SHOE BOX” client.

Yes – I have a computerized financial statement and G/L set-up for myself. This not only includes my business income and expenses and my business assets, but I also keep track of my non-business assets and other personal expenditures such as:

  • tax deductible items, like interest on investments, medical and donations, etc
  • non-deductible interest and expenses similar to my own business expenses
  • all our bank accounts and investment account transactions
  • groceries
  • vacations
  • household items
  • pet related expenses
  • my lottery subscriptions
  • bedding and clothing
  • entertainment, movies, books, and DVD purchases
  • fitness and health expenditures
  • All cash withdrawals are charged to a “Cash Drawings” account direct from my bank statement, and when I finally get around to sorting out my cash expenses, I make lump-sum entries to allocate the “Cash Drawings” to the various expenses, both business and non-business. At the end of the year, I look at what’s remaining in the ‘drawings’ account and try to figure it out if it’s possible I didn’t ask for receipts when I went to the local Donut and Coffee shop, or perhaps there were just many cash outlays that I didn’t want a receipt, or anybody to know what I was spending it on. I’m kooky that way.

    In a future article, I will post my own chart of accounts as a guideline for individual proprietors can adopt for their own personal use.

    SO HOW DOES HART KEEP TRACK OF HIS OWN EXPENSES?

    This is my wall in front of my desk

    This is my wall where I work. You can barely read it, but underneith the shelf, I have stickups taped to the base of the shelf titled “Monday, Tuesday, Wednesday, Thursday, Friday, and Weekend”. At the beginning of every month, I move those FANTASTIC Super Sticky Post-It Notes for my Payroll Deductions Payable (EPD/P) deadline, my Provincial Sales Tax Payable (PST/P) deadline, and my Goods and Services Tax (GST/P) deadline .. under the appropriate day they will come due.

    On the right of my phone, my wife’s niece gave me a sticky thing that attaches to the wall .. I use it all the time for light things, like my Liquid Paper Dry-Line strip, my letter opener and some stickers I use for “Sign Here”. They just stick there, and don’t fall off, so it’s quite easy to remove it, then put it back.

    On the shelf above, there are two bins .. one for me (HART) and another for my wife (YVONNE). I collect cash receipts everyday and include it with my money belt and then at the beginning of the next day, when I start to work at my desk, I take out my receipts and toss it in the “CASH RECEIPTS -HART-” bin.

    Top View

    This is a top view. I keep each month’s receipts in a ziploc sandwich bag, because sometimes when I open the window and there is a great breeze, or when the temperature in my office is almost 30c and turn on the ceiling fan, the bag prevents all my receipts flying everywhere for the cat and dogs to play with and chew.

    Also, my wife might want ask one day .. Where’s all your money? and I will just bring out a ziploc bag for that month, and reply … See how thick this bag is? that’s where it went!

    let’s sort out these receipts!

    For the next move, you must remove all pets from your office, or room .. and lock them in another room. After that is done, I open every month of receipts and start to sort them into piles on the floor of my office. This could be sorted on your desk or kitchen table, if there is room! I prefer the floor because you can have a wider pile, so when you toss or drop a receipt into a pile and it doesn’t line up so smoothly, it doesn’t really matter now, does it!

    After the tape job, I keep them in smaller brown envlopes to accumulate until I’m ready for it.

    After all of the receipts are sorted, I take my calculator and “tape” them … this means, that I add it up with a calculator and keep the machine tape and attach them to the receipts. It’s always good to print out the tape so you (or any auditor) can sample test to see if the receipts included in the total is, in reality, attached.

    When I add up the figures … I always add a few extra calculations on the tape before attaching it to the receipts, because it will make it easier to recap all of my cash payouts at the end of the year for income tax.

    (1)
    TOTAL OF EXPENSES
    divided by
    1.14 (pst=7% plus gst=7%)
    multiplied by
    1.07 (to get back the expense with pst=7% included)
    equals
    EXPENSE AMOUNT

    (2)
    minus EXPENSE AMOUNT
    plus TOTAL OF EXPENSES
    equals = GST Input Tax Credit that I should be claiming for refund.

    After that, I just toss all of the similar bundles of cash receipts into those 6″ x 9″ envelopes I use to keep them together, then I toss it back into the black bin and put it back on my shelf until next time.

    Take care.
    HART
    1800HART.com

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