Set up a petty cash account

We recommend tracking your petty cash with a QuickBooks bank account. You may also want to create a petty cash account for each location.

ClosedWhat is petty cash?

Petty cash is a convenient supply of cash that you use to make small cash payments for goods and services. For example, instead of writing a check for postage due, you can pay for the post directly out of your petty cash box.

You should designate one person at your company to control the petty cash box and to keep track of each withdrawal. Here's how to control the flow of cash:

  1. Withdraw a lump sum from your checking account and place the cash in a locked cash box in the office. Record this using Transfers.

  2. When you give cash to an employee, have the person sign a slip of paper to indicate who used it, when it was used, and what the money was used for. Record this using Expense.

  3. When you need to add more cash to the box, transfer it out of your checking account. Record this using Transfers.

Note: At all times, the amounts on the slips of paper and the cash you have left should add up to the amounts you've deposited in the box.

You can track these transfers and expenses and reconcile your petty cash account just like any other bank account in QuickBooks.

To set up a petty cash account

  1. Click the Gear icon > Chart of Accounts.
  2. Click New.
  3. Click the Category Type drop-down arrow and select Bank.
  4. Under Detail Type, select Cash on hand.
  5. Enter the account Name, such as "Petty Cash."
  6. (Optional) Enter a Description.
  7. Enter the Balance and the as of date.

    If the account is brand new, leave the opening balance at 0. Its opening balance will be created when you transfer funds from the appropriate account to fund your petty cash account. For example, you can fund your petty cash account by transferring money from your checking account to the new petty cash account. How do you transfer funds between accounts?

  8. Click Save.