How to Build a Budget for Your Farm or Food Business
January 19, 2025
How to Build a Budget for Your Farm or Food Business
January 19, 2025

January 20, 2025

Take Control of Your Cash: Simple Steps to Manage Your Money Like a Pro

By Andrea Wright, Director of Accounting

Handling cash may seem straightforward, but if you’re not managing it properly, it can cause a ripple effect of inaccuracies, from understated income to hidden tax liabilities. Whether you're running a bustling farmer's market stall or managing a small shop, good cash management keeps your business running smoothly and helps you avoid headaches later.

Why Tracking Cash Matters

Unaccounted cash makes it impossible to fully understand your business's financial health. Not recording cash income or expenses can lead to:

  • Understated sales, making it hard to gauge actual income.
  • Inaccurate records of labor or other costs.
  • Potential trouble during tax season or audits.

For example, let’s say you pay someone $100 in cash to help at a market but don’t record it. Later, you might forget about it, making your profits seem higher than they really are. Plus, you’d have no record of it for taxes or if you needed to hire someone new. Keeping clear records protects your business and gives you an accurate picture of how it’s doing.

Be a savvy business owner.

Get tips on accounting, finance, marketing, and more, tailored for farms and food businesses—free.

"*" indicates required fields

This field is hidden when viewing the form
This field is hidden when viewing the form
This field is hidden when viewing the form
This field is hidden when viewing the form
Subscribe to Newsletter?
This field is hidden when viewing the form
This field is for validation purposes and should be left unchanged.

Simple Steps for Managing Cash

1. Deposit cash into your bank

The best way to handle cash is to deposit it into your business account and pay for expenses with a debit card, credit card, or ACH. This creates a digital trail, making it easy to track and explain your transactions. If you’re using QuickBooks Online (QBO), here’s how to record deposits:

  1. Gather your cash and checks for deposit.
  2. In QBO, go to the +New button → Bank Deposit.
  3. Pick the right bank account, date, and payments.
  4. Add any extra funds, like cash from sales or grant income.
  5. Double-check that the total matches your deposit.

Pro Tip: Always match your QBO records to your bank deposits. This keeps everything consistent.

2. Keep cash on-hand the right way

If you need to keep some cash for small expenses or change, be sure to track it properly:

  1. Record it in QBO as Cash on Hand.
  2. Note why you’re keeping it, like for change at a market.
  3. Keep receipts or records of what it’s used for.

3. Record cash expenses

When you spend cash, make sure it’s documented:

  • For Business Expenses: Record the expense in QBO and attach receipts. Receipts are critical for proof since cash has no digital record.
  • For Personal Use: Log it as Owner Draw or Personal Expense in QBO. This helps keep personal spending separate from business operations.

Farmers Market Example: A Simple Way to Track Cash

Let’s say you start a market day with $100 in change and make $500 in sales. At the end of the day:

  1. Count your cash. Keep $100 for the next day’s change.
  2. Record the remaining $500 as sales in QBO or your spreadsheet.
  3. Make sure your records match what you actually received.
  4. If you paid any expenses with cash at the market, you should still record the total gross sales—including the cash spent—and then separately record each expense in QBO to ensure both the income and the expenses are accurately captured.

By tracking every dollar, you’ll know exactly how much you made and spent.

Protecting Your Cash

Here are some tips to keep cash safe and organized:

  • Set Up Safeguards: Create rules to prevent mistakes or temptations, especially if family or friends help with the business.
  • Use a Lockbox or Envelope: Store cash securely and keep notes on how much is there and why.
  • Check Your Numbers: Compare your sales and cash at the end of each day. Even small discrepancies, like $20, need to be addressed.

If you use a sales system like Square, you can pull daily reports to double-check cash sales to ensure the total cash received matches the end-of-day count.

Don’t Let Cash Management Stress You Out

Managing cash doesn’t have to be overwhelming. Start by setting up clear systems and sticking to them. When every dollar is accounted for, you’ll avoid unnecessary problems, save time, and always know exactly how your business is doing.

Want extra help creating a smooth cash management process? Reach out to set up a free consultation with our Accounting team!

Dig deeper.