How to record and deposit cash payments

For every cash payment, issue a receipt, record the amount and payment method, and reconcile the cash log with bank deposits. Cash business receipts still belong in your books. Larger receipts may also trigger a separate Form 8300 filing, even when the bank reports the deposit.

Write the receipt before the money leaves the doorstep

A cash payment needs a receipt identifying the payment and any remaining balance. It may pay the invoice in full or only in part. Give the customer a numbered document, keep a copy, and do it at the curb rather than that evening from memory.

The names and amounts above are fictional, and the tax amount is illustrative; use the correct treatment for the job.

A carbonless duplicate receipt book does this on paper: customer takes the top sheet, you keep the copy. Emailing a paid invoice from your phone before you pull out of the driveway does it better, and gives the customer a digital copy. Keep your own receipt record too.

Two habits go with it. Count the bills in front of the customer before you write the amount. And carry $60 to $100 in fives, tens and twenties, because the customer handing you $700 for a $640 job is going to wait for change.

Record cash income even without a tax form

A card payment shows up in a processor statement. A check shows up on a bank line. A cash receipt needs its own entry in your books. IRS Publication 334 requires business receipts to be accounted for regardless of payment method. Include cash under your applicable accounting method, whether or not a customer ever issues you a 1099-NEC.

The same goes for sales tax. If the work would have been taxable paid by card, it is taxable paid in cash, and the tax collected in twenties is money you hold on the state's behalf until you file. Whether labor is taxable at all depends on your state and sometimes on the job type, so ask your state revenue department.

The cash log that turns a stack of bills into a record

One running list, on paper or in a spreadsheet, covering only cash. Every payment in, every deposit out, a balance you can compare against what is actually in the envelope.

The line that is missing from that table is the one to be careful about: paying the supply house out of the collected cash before it is deposited. That is not inherently off-book if both transactions are recorded. Record the full customer receipt and the separate purchase, keeping the supplier receipt. Depositing first and buying through the business account can make the trail easier to reconcile.

Deposit regularly and never split cash to evade reporting

Deposit on a rhythm — end of week, or whenever the envelope passes an amount you would not want to lose. Cash kept in the truck can be lost or stolen. Keep the cash log current and reconcile it with actual money on hand and bank deposit records.

Two things worth knowing about the bank. Many business checking accounts include a monthly cash-deposit allowance and charge a fee per hundred dollars above it, so ask what yours is before your volume grows into it. FinCEN’s customer guide explains bank reporting for cash transactions over $10,000, including aggregation rules. The bank’s report is separate from your business’s Form 8300 obligation.

Breaking a $12,000 deposit into smaller transactions for the purpose of evading reporting is structuring. Deposit on your normal business schedule, retain the source records, and answer the bank’s questions truthfully.

When a cash payment tops $10,000: Form 8300

Businesses that receive more than $10,000 in cash in one transaction, or in related transactions, generally have to report it on IRS Form 8300. The IRS says the filing is generally due within 15 days. It also requires a written statement to each named person by January 31 of the following year, subject to limited exceptions. Related-transaction rules can mean two payments on the same job add up to a filing.

A $14,000 cash draw on a kitchen remodel is rare but not imaginary. If it happens, read the current instructions or call your CPA that week — the mechanics, the e-filing requirement and the definitions get updated, and this is not a rule to reconstruct from a forum post.

Compare a cash discount with the processing fee saved

The customer asks what you would do for cash. The honest version of the answer is arithmetic. Take a $2,000 job, using an illustrative card fee of 2.9% plus 30 cents:

You gave away $200 to avoid $58. If a cash discount makes sense for you, size it to the fee you actually save — using your actual cost comparison, disclosed in advance and shown on the paperwork. Check your processor’s rules and applicable price-display law.

A cash discount does not remove the obligation to record the sale. Keep the agreed price, discount, tax and actual payment consistent across the receipt and books, whatever the payment method.

Use the approved quote to prepare the receipt

The approved quote in DoneQuote provides the priced scope to reference when preparing a receipt. Copy the relevant details into your receipt or accounting tool, check approved changes, and record the amount actually received, payment date, cash method and remaining balance there. Quote approval does not record a cash payment.

Cash is not the risk. An undocumented payment is.