Administration

Cash records: how to keep track of cash properly

Written by Ilias3 min read

Cash records: how to keep track of cash properly

For the tax authorities, cash is the most sensitive part of any set of records. There's no bank statement to confirm your story, so you have to be able to show yourself what came in and went out. This article explains when you need to keep cash records, how to do it and which mistake most often leads to trouble.

When do you need cash records?

As soon as you receive or spend cash in your business. That mainly applies in hospitality, retail, at markets, in hairdressing and in construction, but also if you occasionally let a client pay in cash. If everything comes in by bank transfer or payment request, you have no cash balance and don't need a cash book. If in doubt, ask whether money that belongs to your business ever ends up in your wallet: then the answer is yes.

What does a watertight cash book involve?

A cash book is a running record of all cash receipts and payments, with date, amount and description. The balance it produces must match the money you actually have on hand. So count your cash regularly and record that count, for example on a daily sheet. Small differences are human, but do book them as a cash discrepancy rather than leaving them out. If you use a till system, keep the daily reports and the underlying detail, not just the daily total.

Why a negative cash balance is a problem

In reality your cash balance can never fall below zero: you can't spend notes that aren't there. If your books nonetheless show a negative balance, that's proof that receipts are missing or payments were booked incorrectly. For the tax authorities that's an immediate signal to dig deeper, and in the worst case to estimate your turnover themselves. So when closing each month, check that the cash balance is positive and explainable.

Private and business in the cash book

If you take money from the cash box for private use, book it as a private withdrawal and not as a cost. If you put private money into the business to pay for something, that's a private deposit. These are the entries that keep your cash book balanced without distorting your profit. Also take cash to the bank regularly and keep the deposit slip; a cash balance that builds up to thousands of euros over months always raises questions.

What's sensible to do?

Keep your cash book daily rather than reconstructing it afterwards; making it add up later takes more time and rarely produces a credible whole. Keep all till receipts, daily sheets and count slips for seven years, just like the rest of your records. If you handle a lot of cash and want to be sure your setup survives an audit, go through it with us once.

This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.