On the Road Again: How to Handle Petty Cash on a Business Trip
Isn’t it great to be traveling again? We’ve seen an influx of people flying to conferences, trade shows, and client meetings or presentations. With this, we’ve also noticed an increase in cash withdrawals to help with travel expenses. When traveling, it’s convenient to have a little cash in your wallet for tipping and incidentals. In many ways, cash is still king!
This means we don’t have a digital record, through your bank and credit cards, so YOU are responsible for collecting receipts and documenting records that would hold up under IRS audit.
Let’s review some of the key things to keep in mind when spending cash for your business.
Petty cash is NOT a qualified business expense
However, you can deduct many of the items you purchase with this cash. It’s important to follow a consistent process for establishing and handling your Petty Cash Fund. Make sure you are recording all your deductible expenses - at home and abroad!
guidelines for handling petty cash while traveling
We know that traveling can sometimes be hectic, from jet lag to lost luggage. However, taking the time to record your petty cash expenses will save you time in the long run and ensure that you are able to deduct these transactions at tax time! Here are some simple steps you can take to keep your cash transactions in order:
Start a log when you remove the cash. This can either be on paper or a spreadsheet. Your initial withdrawal is your Beginning Balance. Each time you spend from this Petty Cash Fund, make a note on the log including the following:
Date of the purchase
Where the purchase was made: name of business, country, etc.
Amount
What business was being conducted; travel meals, transportation, etc.
Example: “I checked into the London Marriott for a conference on June 3rd, 2023 and tipped the bellhop $10.”
Keep receipts for any purchases made from a vendor or retailer - paper or digital.
Total all expenses at the end of your trip and then check the balance remaining in your petty cash log. Make sure they match.
Return remaining cash to your business checking account.
Send your petty cash log and any receipts to your bookkeeper!
Petty Cash Custodian
If you are traveling with colleagues, it may be a good idea to appoint a custodian of your petty cash fund. This person would be responsible for dispersing cash to others and recording withdrawals. They could also collect receipts from everyone in the group. This person is also assigned to reconciling the petty cash fund at the end of the trip and investigating any discrepancies.
Appointing a petty cash fund custodian can help to streamline the process of recording cash transactions while traveling. Because cash is still a rather insecure method of payment, usually the fewer people handling petty cash, the better.
Stay organized
While cashless payments have taken ahold of the way the world conducts business, many people still prefer the ease of using cash when traveling. Having a fixed set of procedures for handling your business’ cash can safeguard your company and is crucial to making sure all your expenses are accounted for. The more organized your Petty Cash Fund is, the better your bookkeeper can help you keep your books on track. As always, Evergreen Bookkeeping is happy to answer your questions on petty cash and more. Happy trails!