How to manage your petty cash in QuickBooks? - QuickBooks Mauritius | Quick Focus Mauritius | Accounting Software

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8 Steps to Managing Petty Cash in QuickBooks

1. Bank all sales receipts directly in your bank
2. Create a Petty Cash Account in QuickBooks.
3. Drawn a cheque
4. Keep all your petty cash bills and vouchers together
5. Write a cheque in QuickBooks
6. summarise your bills on an excel sheet
7. Replenish your Petty Cash
8. Check your Petty Cash balance

Many businesses in Mauritius including companies, SME’s or even Corporates, use cash to meet their daily petty expenses. Often these expenses are neglected due to their value and immateriality and no proper system is put in place to control cash transactions.

Why is a proper control over cash important?

A proper control over cash expenses is essential to:

• Avoid misuse and misappropriation of fund.

• Avoid cash being used as an easy route for meeting expenses which otherwise would require more time for approval when using normal cheque payment approval route.

• Ensure that all cash transactions are properly recorded.

• Keep trail and evidence of expenses in case of investigation by the Mauritius Revenue Authority (MRA).

You can find a wide range of accounting software that can be used to manage these transactions, but QuickBooks holds a prominent place out of them. QuickBooks Accounting Software which can be customized for business in Mauritius is very useful in setting up a proper control over Petty Cash. A cash float is always very helpful to meet small and miscellaneous expenses. These include postage, utilities, office expenses and emergency supplies. As you will see, setting a Quickbooks petty cash account has never been made so easy.

Let us show you how to properly set up a petty cash control in 8 Steps:

This will depend greatly on the type of business you are running and the cash needs of your business. Some companies will keep just Rs 100, while some businesses might need as much as Rs 10,000 or even more per week.

As I mentioned earlier, QuickBooks can be integrated with any type of business activity in Mauritius. It is available in three editions as QuickBooks Pro, QuickBooks Premier and QuickBooks Accountant. Each edition comes with a unique set of features and you can go for the best one that matches perfectly well with your specific business needs and requirements.

What expenses are met by cash?

Step 1

1. Overlooking Account Reconciliation

Bank all sales receipts directly in your bank. Never use sales taking to finance your expenses as this will make your control over your debtors more complicated. This may also open the door to misappropriation of funds.

Step 2

2. Mistakenly Sorting Transactions

Create a Petty Cash Account in QuickBooks. The type of account selected should be a bank. Watch the video below to know how to do it on QuickBooks Pro or QuickBooks Premier alike. This video was captured from QuickBooks Premier 2014

Why is accurate transaction categorization crucial?

1. 1. Precise financial reports***:*** sorting transactions guarantees that your financial reports accurately portray your business status. This enables you to make decisions based on data offering a clear view of your income, expenses and overall profitability.
   2. Accuracy in tax filings***:*** Misclassification can introduce errors in your tax filing procedures. If you mislabel expenses, you could unwittingly understate your tax obligations potentially leading to penalties, fines or even audits from tax authorities.

   Tips for avoiding transaction misclassification

   1. Define consistent categories***:*** Develop a list of income and expense categories that align with the nature of your business operations. Ensure these categories encompass all transaction types undertaken by your business.
   2. Educate your staff***:*** Teach your employees the importance of categorizing transactions. Offer training, on how to assign transactions to the categories. Stress the significance of misclassification on reporting and tax filing.
   3. Regularly check transaction categorization: Review your transaction categorization periodically to ensure accuracy. Look for inconsistencies or errors. Make adjustments. This routine can help identify mistakes and prevent them from impacting your reports or tax filing.
   4. Overlooking User Permission Setup***:*** Failing to set up user permissions in QuickBooks Online can lead to outcomes for your business. This robust accounting software allows customization of access levels for users ensuring data security and precision. However improper configuration of user permissions may result in issues such as data entry mistakes, unauthorized modifications and potential data loss. To avoid these setbacks, it is vital to assign roles and permissions to each user limiting access only to what is essential for their specific role, within the organization.

Step 3

3. Setting up user permissions

Why is it essential to establish user permissions, in QuickBooks Online?

1. Drawn a cheque of Rs 5,000 or any other amount depending on the size of your transactions and business activity. A service company will need less cash than for example a construction company, where petty items might be required to be purchased for ongoing contracts.

How do you effectively configure user permissions, in QuickBooks Online?

1. Assess user roles***:*** Before setting up user permissions it's crucial to evaluate the roles and responsibilities of each individual in your organization. This assessment will assist in determining the level of access needed for each person.
2. Determine the roles***:*** QuickBooks Online provides a range of predefined roles, like Administrator, Standard User and Custom User. Assign the role that best fits each users’ responsibilities.
3. Personalize permissions***:*** Once roles are assigned, adjust each users’ permissions within that role. Tailor access levels to areas like sales, purchases or payroll according to each users’ requirements.
4. Regularly assess and update permissions***:*** As your organization progresses it's crucial to review user permissions. Make changes to match any shifts in roles or duties ensuring that access remains up to date and secure.
5. Overlooking the Importance of Regular Backups***:*** Neglecting regular backups could lead to consequences. Imagine losing all your records and transactions due to an issue or accidental deletion. The impact could be severe not, in terms of loss but also wasted time and effort trying to recover or recreate the lost data.

Step 4

4. Ignoring the importance of regular backups

Keep all your petty cash bills and vouchers together and make a total on a weekly or monthly basis.

Step 5

5. Overlooking bank rules

Write a cheque in QuickBooks selecting Petty Cash as Bank to analyse all the difference expense to their respective accounts. This way QuickBooks will Debit your expenses account and will Credit your Petty Cash Account.

Step 6

6. Neglecting to track VAT

You may summarise your bills on an excel sheet if you have several transactions and just post the total following step 5

Step 7

7. Misunderstanding the charts of accounts

Replenish your Petty Cash by drawing a new cheque for the total amount arrived as per Step 3 above.

Step 8

7. Misunderstanding the charts of accounts

Check your Petty Cash balance on a daily, weekly or monthly basis by comparing your Petty Cash balance as per QuickBooks with your cash count.

Step 3

3. Setting up user permissions

Always remember to adopt the following best business practices to establish a proper control over cash transactions.

1. Never use sales takings to finance your cash expenses. Receive payments and make deposits of all receipts from clients in your QuickBooks.
2. Whenever your staff requests you for a petty cash replenishment, make sure all bills and vouchers are originals. Never accept copies.
3. Total summaries of bills/vouchers presented to cross check arithmetical accuracy.
4. Make surprise cash count from time to time.
5. Sign and approve all Petty Cash requests.
6. Consider paying by cheque, expenses which are recurrent and material.

Just like a bank account it's a good practice to reconcile your petty cash account on a weekly or monthly basis on your QuickBooks accounting software, just to determine whether your cash in hand, balances with your Petty Cash Account in QuickBooks. . There is absolutely no difference in the operation whether it is done on QuickBooks Pro, QuickBooks Premier or QuickBooks Accountant Edition. There is just one fundamental difference in the reports. In QuickBooks Pro you can only view previous month reconciliation, while in Premier and Accountant editions, you can view any previously reconciled periods.

Finally, at the end of our video you can see how transactions posted through the cheque entry in QuickBooks 2014 for a petty cash expenses will affect your financial reports. You may also check the effects of the entry on the financial statements, by generating a profit and loss and balance sheet in QuickBooks.