We have a Point of Sales terminal to handle all credit card transactions. The credit card processor company sends us 1099K form that we use for tax purposes. This works fine for our small beauty salon.

However, how are businesses supposed to handle cash transactions? Currently we write them down into a notebook with a pen to know how much we earned to file taxes correctly.

  1. First of all is this a legal way to track cash transaction or are we required by law to have cash register (California)?
  2. Any other alternatives you could suggest to track cash transactions? I imagined that something where we would get another 1099K form for cash transactions would make accounting at our side easier when filing taxes (e.g. cash register connected to Internet).

1 Answer 1

  1. There's no law in California that says you have to have a cash register. Logging cash sales manually, as you are doing, is fine.

  2. A cash register would help you track your cash sales as you describe. Some POS software will also allow you to log cash transactions, but it sounds like you just use a credit card processing web site or application, not a full-fledged POS system.

In any case, for a small business, one option might be to get a cash register to log your cash sales, and continue to process credit cards the way you are (or continue as you are doing). Come tax season, use the output from both systems to calculate your income. You might want to consider an accounting software like Quickbooks so you can reconcile your income and expenses and statements from different sources.

Also, as with any small business, it's worth your while to consult a tax accountant to make sure you're doing everything "by the books". Once you're set up properly, keeping the books in order becomes routine and easy.

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