Yes, it goes without saying that Quickbooks has made it easier for your business to manage the funds and its distribution. The main objective of this write-up is to get you to make the most of this amazing tool that you’ve got on your hands. But before we begin, let’s get a few details on track. You must have a fully-functioning Quickbooks setup, and you must know the basics of how to create additional account, add funds to that account and set the type of those accounts. Quickbooks services can only be taken advantage of once you know your way around the tool.
In one sentence, petty cash can be described as a transaction that is too small to be written-off as a cheque. However, when added up, the sum of these small transactions can amount to a lot of money, and thus it makes it important for business owners to record the statements and Quickbooks might just be the tool for that.
Now, without any delay, let’s start this step-by-step guide that’ll help you make your petty cash record more organized:
Step 1: Create a new account called ‘Cash in Hand’
Since petty cash usually deals with the cash which is ‘physically’ present in and around the office, you need to make an account the specifically records the amount of the total cash from which you are going subtract the petty cash transaction. Make sure that the account type is ‘Bank’.
Step 2: Create another account called ‘Petty Cash’
Just like the account created before, make sure that the petty cash account which you created is also of the ‘Bank’ category. The reason you need to do this is because setting the account category as ‘Bank’ gives you access to more features that you’ll need later on.
Step 3: Create the employee sub-accounts
When creating an account for your employees, for e.g. Employee#1 or Employee#2, you’ll find that there is a checkbox below the text field where you fill in the account name. Click on the checkbox and make the employee account a sub-account of the ‘Petty cash’ account.
Now that we are done with the basic setup of our transaction, let’s take you through the flow of funds. This is where all the accounting and funds transfer becomes our main focus. Here’s a step-by-step guide for the fund transfer:
Step 1: Transfer funds from the Bank to the ‘Cash in Hand’ account
Yes, this step is obvious, but here is how you’ll go about it. Click on the ‘Banking’ tab on the toolbar, from the drop-down menu click ‘Transfer Funds’, and then type in the respective information and the amount that you want to transfer into your ‘Cash in hand’ account.
Step 2: Repeat the same step again and again
This is why Quickbooks is considered to be an easy and simple of keeping your books in check. All you have to do now is repeat the steps. First you need to transfer the funds from your ‘Cash in Hand’ account to your ‘Petty cash’ account, and then you have to repeat the same step while transferring funds from ‘Petty cash’ account to your employee’s account, which is a sub-account of the petty cash account.
Is it okay to transfer directly from the bank to your employee’s account?
To be honest, transferring directly from the bank to your employee’s account will definitely save your time. It is going to cut the repetitive steps that you are taking from transferring funds from one account to the other. But, would it be an efficient way of keeping the books? Accounting is all about the details, missing even a single detail can cause a lot of confusion later on. Will it be worth it?
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Why should the account type be ‘Bank’?
When it comes to invoices, setting the account type as ‘Bank’ would be quite handy. Now go back on the ‘Banking’ tab on the toolbar and from there click on ‘Write check’. Enter your employee’s account name on the text field, and you’ll notice at the bottom of the screen there is a sheet that you can fill, there must be two of them, ‘Expenses’ and ‘Items’. This is where a ‘Bank’ type account comes into play, as gives a much easier way to keep track on the invoices sent to you from our employees and enter all the details into the system.
Now that you have got the basic gist of how to record petty cash in Quickbooks, it is safe to assume that you businesses’ finances are going to look much more organized from not one. There are a lot of things that this amazing tool can do, but no matter how complex the tasks are, their execution is still much more methodical and simple.
