If you are self employed, you will probably keep a cash book, which is a way of summarising the income and expenditure of your business. The principal is the same regardless of whether it’s a physical book, or an Excel spreadsheet. We’ve touched on the different ways of dealing with this here.
So what’s a balanced cash book?
In very broad terms, business transactions will either be through a bank account or by cash. The business usually has documents such as bank statements to verify the validity of the bank transactions, but there is nothing to corroborate the cash transactions. The idea of a balanced cash book is to balance the cash. So on a regular basis, it takes the opening cash balance in the till, adds any cash income, deducts any cash expenditure, which leaves a closing cash balance. This can then be checked against the physical cash balance in the till.
Opening balance £ 200
Add Income £2,000
Less Cash to bank £1,000
Expenses and drawings £ 500
Closing balance £ 700
The money in the till should be counted and it should, in theory, be £700.
Why is this where can i buy cialis important?
Some businesses, such as pubs and shops, do a lot of business in cash. They need to show a level of control over that cash, both for their internal purposes and also for any external enquiries from HM Revenue and Customs (HMRC). Small cash differences may be tolerated, but larger ones need to be explained. Failure to put together a credible explanation may result in HMRC putting 2 and 2 together and getting the wrong answer.
Why would there be a difference?
Cash differences arise from a number of reasons, including (but not restricted to):
- Cash payments made from private funds,
- Theft by staff or customers,
- Income not recorded in the cash book,
- Cash paid to bank and not recorded,
- Cash taken by owner and not recorded,
- Payments to casual staff
You can see that some of these are quite serious, and could result in problems later on. Therefore, it makes sense to make sure that the process is correct in the first place.