If you handle a lot of cash, it can be a pain to track accurately. How can you remember weeks later what you spent your cash on? You can’t! Really good bookkeeping is about not wasting your brain on things like that.
Paying contractors with cash
Let’s look at the overhead side first, specifically in the real estate world. The people mowing your lawn may not even have a computer or an email address, much less a bank account. And the same thing may be true for multiple contractors you work with.
I know plenty of business owners who go to the ATM, pull out $200 in cash, then spend that throughout the week on their contractors that only take cash. But that won’t hold water!
Sure, they know they spent it on contractors. But which ones? If someone really sat them down and asked them that question, they would have no idea. And that information is essential for good bookkeeping.
Getting paid with cash
You can run into similar issues on the income side. When you get paid in cash, you may be tempted to say, “Well, it’s just money for me either way.” The real issue is that you may have a cash register, petty cash, your own money, and several other categories as well.
Once you’ve got a few different categories it can get confusing. To even understand where your business stands financially you have to spend extra time putting all the information together. And that’s just for you to understand it! For taxes and other things it can take even more work.
If you don’t have a system for documenting things up front, you end up having to remember them for days, weeks, or even months. That’s wasting your brain!
Solving the cash problem
Don’t make yourself responsible for remembering. Write it down right away! And be sure it’s saved somewhere that plays well with others. People like your bookkeeper should be able to access that information, so store it on Google Drive or somewhere similar.
Going to the hardware store to pick up nails for your apartment complex? When you get the receipt, write your property name on it, and be sure the name of the store, nails, the total, and the date are all readable. Then take a picture, save it in Google Drive, and throw the receipt away!
Depositing cash at the bank? On the deposit slip simply write the amount, who it’s from, and what it’s for. Then take a picture of that deposit slip and save it in your Google Drive as well.
If you don’t have a system set up ahead of time to remember what the cash is for, you’re wasting your brain. Do all the documentation right away, then you can forget about it!