How to Keep a Cash Receipts & Payments Journal

You can organize personal- or business-related cash receipts using a payment journal. Cash receipts come in different forms and styles. Some receipts are printed documents on formal stationery, while others are handwritten and brief or electronic and extremely descriptive. At a minimum, receipts highlight the amount your paid and item(s) you received.

Instructions

1. Determine if you will maintain a hard copy or online journal. You can purchase a general ledger book, such as at Staples or OfficeMax, that allows you to record and reconcile payments by hand. You also can use journals through computer programs, including Quickbooks or Quicken.

2. Select a consistent recording schedule. You can track receipts and payments on daily, weekly, or monthly basis. The more frequently you record, the less likely you will make errors, such as forgetting to record or losing a receipt.

3. Identify subaccounts rather than using one general account. For example, if you operate a small business, then create separate accounts for rent, utilities, office supplies, and equipment instead of one major account for all business receipts and payments. You will organize your journal more efficiently by distinguishing relevant subaccounts.

4. Record transactions correctly. Under the cash method, you record cash when actually received or paid, unlike with the accrual method when you record transactions immediately even if payment will be made in the future. Consider if your marketing account has $1,000 and you will spend $50 for web server hosting. Your journal should reflect a $50 deduction when you submit payment and remaining total of $950 when using the cash method.

5. Maintain folders to store receipts. You can establish an online (e.g., save emailed receipts, scan paper receipts) or manual system. You should retain receipts as evidence in case you are audited.

6. Limit access to journals and account information in order to establish basic controls. You personally can enter receipts and payments. You also can hire an employee or company to assist you. Issues with theft, fraudulent records, and embezzlement often arise when access is unsupervised.

Tips & Warnings

• Create visual tools, such as bar charts or graphs to track spending.

• Regularly review your bank statements against your journal. A monetary excess or shortage signals a mistake. If you reconcile your accounts every quarter, then you must review the last three month's transactions to find the mistake.

References

• Business Owner Toolkit
• IRS tips