Cash Poor

[oceansky]

An informal poll: What perceneforum.xxxe of your payments come in cash, check & charge? For me, I don't accept credit cards, so that's always been 0%. For all the years I've been in practice, payments have averaged 20% cash & 80% check. This year, something switched. I now very rarely get cash payments. If I get audited, the IRS will think I'm cheating! Actually, it feels very strange to have to visit the ATM for the first time in years.

A colleague of mine, in contrast, receives mostly cash payments.

I'm curious about the rest of you. What's your payment breakdown in %cash, %check & %charge?

 

[StephenWeinstein]

I dont really understand about the ATM thing or why the IRS would audit you.

I never really thought about the perceneforum.xxxes... hmmm, I would have to say... on average, 10% charge, 20% cash, and 70% checks. Around the holidays charges can go WAY up though, throwing the whole thing out of whack.

I always deposit all my checks and cash from my business into my business checking account. When I pay myself, I have the bank transfer money to my personal account. I stopped doing cash draws about 9 months ago.

 

[smifty]

I probably have less than 10% cash come in. Maybe 60% check and 30% credit card...

 

[Kendal]

We do probably 80% credit card, 10% check and 10% cash.

Tips are probably half on credit card and half in cash. Tips are great....I rarely need to visit the ATM for cash!

Angie

 

[Needfulthings]

I dont really understand about the ATM thing or why the IRS would audit you.

In the past, although I claimed my cash as income, I didn't bother depositing it in the bank. I used it as my spending money. Now, since clients have stopped paying in cash, I need to go to the ATM at least once/week.

As for the IRS, they expect people in our business to get paid in cash sometimes. An accountant told me if you don't claim at least 10% of your income as cash, they'll assume you're lying (hiding your cash payments to reduce your tax burden).

 

[richard m]

I get it, I get it.

I do the opposite. I pay for 99% of my business stuff with check, debit, or credit card.

 

[fizzyfitzy]

Wow, I'm really surprised at the high perceneforum.xxxe of checks!

We stopped accepting checks with this last new year. (We make exceptions for regular clients who have been with me for a while, or people in law enforcement, since around here, 1 hot check can cost them their job.) And actually, only a few ppl wrote checks before anyway, so it didn't make much of a difference.

So we deal entirely with cash, except for the gift certificate option on our website. We inform ppl upfront when they schedule the appointment, though, that we're not set up to deal with anything but cash. (For the record, we haven't lost an appointment or even gotten a negative response over that, and our client retention is high, so even in our credit-card-heavy area.) Surprisingly enough, no one has even asked "do you take credit cards?" when scheduling an appointment. We must be sort of an anomaly! LOL

Hugs,
~Jyoti

 

[wish~]

An accountant told me if you don't claim at least 10% of your income as cash, they'll assume you're lying (hiding your cash payments to reduce your tax burden).

Interesting. We just don't get that much cash. Hope they don't get agitated with us for that!

We have about 90% credit card, 8% checks and 2% cash.

 

[walk 112 ??l?]

I think that tax departments and auditors like to look for changes in patterns. So if you used to have a lot of cash payments and now you don't, why did it change? You are not sure yourself, but that's what they would be looking at.

If your expenses have always been at a certain level or perceneforum.xxxe and they suddenly climb or drop, auditors consider that a red flag. Were you cheating before, or now?

(In a previous life, I did some tax preparation.)

 

[Away With The Fairies]

You need a better accountant

As for the IRS, they expect people in our business to get paid in cash sometimes. An accountant told me if you don't claim at least 10% of your income as cash, they'll assume you're lying (hiding your cash payments to reduce your tax burden).

This sounds like an urban legend (the PC version of an old wives tale)

The IRS reviews your tax returns, not your bank records. No where on any tax form does it ask you what % of your sales were cash, check or credit card. You declare your income and your expenses - the IRS is blind as to the source.

If you do get audited, then you show your sales records and bank statements. But bank statements show total deposit, not deposit by type. If you declared all of your cash sales in prior years and have records, you have nothing to fear. Either the same client changed a method of payment, or you no longer have that client but have one who pays by check.

I think you are worrying about nothing.