Petty cash is the money you use for small, business-related expenses (usually less than $100). You might keep this money in a cash register drawer, in a cash box in your desk drawer, or as money that the owner, job supervisor, project manager, or bookkeeper has in his or her pocket.
You can decide whether or not you want to track your petty cash expenses in QuickBooks. For example, some sole proprietorship businesses may find it to be extra bookkeeping work, especially if they simply charge small company expenses on a company credit card or write a check at the time they make a purchase.
However, if you do use petty cash for your small business expenses, you can track it in QuickBooks. To do this, you'll need to set up an account, put money into it, then record the expenses for money you take out of it.
The way you set up and use a petty cash account depends on your business type.
If your company is a cash-based business, such as a retail store, you use a cash drawer to collect money and give change to customers. In most retail businesses, the base amount of money in the cash drawer is used for petty cash transactions. If this is how you handle petty cash in your business, use the cash drawer account for your register to record petty cash expenses.
If your company is not a cash-based business, but you occasionally have small cash expense needs for which you use petty cash, you need to set up a petty cash account.