What Is Petty Cash? A Simple Log for Small Business

General information, not tax or accounting advice.

Petty cash is a small amount of business cash set aside for minor purchases that are easier to pay in cash than by check. Accounting texts describe it as a fund for small payments when using the usual payment process is impractical (OpenStax on petty cash). Keep each payment connected to its purpose and receipt.

Keep a separate fund only if your business needs one. Write down each payment and save its receipt with a petty cash slip. The sample log below shows what to include. A bookkeeping spreadsheet for small business income and expenses can hold the expense entry; keep the cash and source documents separately.

Petty cash at a glance

Petty cash is a small fund used to pay for minor business costs without writing a check for each one. The IRS describes it as a way to make small payments and says to prepare a petty cash slip for each payment and attach it to the receipt.

Write a separate line for every payment. “Postage for client samples” tells you more than “supplies.” Keep personal spending out of the fund so the business record stays clear.

Do you need a petty cash fund?

You need petty cash only when your work sometimes requires small physical-cash payments and another payment method is inconvenient. A solo owner who buys everything with a business card may not need a separate fund at all.

Examples can include a small postage purchase, a parking fee, or a low-cost item bought while away from your desk. These examples do not make a purchase deductible or tell you how to treat it for tax purposes. Keep the receipt and ask a tax professional when you are unsure how to classify a cost.

Before you start a fund, ask yourself:

1. Do I make small business purchases in cash more than once in a while?
2. Can I keep this cash separate from personal money?
3. Will I record each payment when it happens?
4. Can I keep the slip and receipt together until I file the expense in my books?

If the answer to the first question is no, do not add a cash process just because a template shows one. If cash is useful, choose a starting amount that fits your own purchasing pattern. There is no universal amount that every small business should keep on hand.

What should a petty cash log include?

A useful petty cash log identifies the payment, the person who made it, and the evidence that explains it. The IRS calls for a petty cash slip attached to the receipt for each payment. Cornell University’s finance guidance gives examples of details to keep, such as date, amount, person, and business purpose; those are Cornell’s controls for its own funds, not a rule for every business.

Keep the purpose and category separate. “Postage” names a category; “mail sample kit to client” says what the payment covered. If you cannot tell which category fits, write a plain description and check it during your normal bookkeeping review instead of guessing.

You can keep these fields on paper or in a spreadsheet. The log is an index, not a receipt. If a receipt is missing, note what happened while you still remember it and ask your tax professional how to handle the record.

How do you fill in a petty cash log?

Start with the amount of cash you set aside, then record each payment as it happens and keep its receipt with a slip. The figures below are illustrative only. They are not customer data, expense limits, or tax guidance.

Suppose a business starts with $100 in its cash box. The owner pays $12.40 for postage, $8.60 for printer paper, and $16.00 for parking during a business errand. The arithmetic leaves $63.00 in the box.

The category labels are examples. Use categories that fit your own records, and check classification questions with a qualified professional. Write down the purpose and file the receipt when you make the payment. That is easier than trying to remember the details at month-end.

For each cash purchase:

1. Write the date, amount, purpose, and person who used the cash.
2. Make a slip that describes the payment.
3. Attach the slip to the receipt, or store a clear digital copy with the same reference.
4. Add the expense to your regular business records using your normal process.
5. Keep the petty cash papers together by month or another filing method you can maintain.

The IRS explains that supporting documents help substantiate book entries and says to keep them organized. Its examples include receipts and petty cash slips for small cash payments. Read IRS Publication 583 on business records and petty cash for the source guidance. This article does not explain how to reconcile a bank account or decide whether a purchase is deductible.

How does petty cash fit the rest of your books?

Your petty cash log follows the cash; your books follow the business expense. They serve different jobs, so connect each entry to its expense with the date, purpose, and receipt reference.

The IRS says a recordkeeping system should summarize business transactions and use supporting documents for the entries. OpenStax explains one double-entry example in which setting up a petty cash fund moves money between cash accounts; the fund itself is not the purchase. If your books use double-entry or you are unsure how to record the fund, ask an accountant how to handle it. The example in this article is only a simple cash log, not a complete accounting method.

Where the Easy Bookkeeping Sheet fits

The Easy Bookkeeping Sheet (easybookkeeping.site) includes cash as a balance and lets you tag income or expenses by payment method. Its entries and overviews can help a solo owner see recorded expenses alongside other business activity. The Easy Bookkeeping Sheet workbook costs $9 one time and works with Excel and Google Sheets.

It is not a petty cash voucher system. It does not scan receipts, attach slips to transactions, or track every bill in a cash box. Keep those source documents in your own filing system, then enter the expense in the workbook if it fits your books. If you need a small business bookkeeping template with linked income, expense, and overview tabs, see how that structure works. The receipt filing routine for business expenses can help you keep the supporting papers findable.

The workbook is designed for straightforward record keeping. If you need invoicing, bank feeds, payroll, receipt scanning, or double-entry accounting, choose a tool that includes those jobs. For a broader view of how a linked file can hold business income and expenses, see our bookkeeping spreadsheet guide.

Why trust this article?

The Cosmo Suite team makes the Easy Bookkeeping Sheet, so we are not neutral about spreadsheets. We based the petty cash guidance on IRS Publication 583 and the cash-handling examples on Cornell University’s published finance guidance, checked on 3 November 2026. The dollar amounts in the log are a constructed example, not customer activity or tax advice.

Read about the team behind this site and our editorial policy for sources and corrections. This article is general information, not tax or accounting advice. Ask a tax professional about your situation.