How to manage a business that takes mostly cash: daily cash controls, recordkeeping, tax reporting including Form 8300, paying employees correctly and reducing theft.
Food trucks, small restaurants, salons, laundromats, farmers market stalls, car washes and many service businesses take a lot of cash. Owners cite card processing fees, speed at the counter and customer preference. Running a business that is mostly cash is legal in most places, though some states and cities require certain businesses to accept cash, and customers increasingly expect to pay by card. Whatever mix you choose, cash brings specific responsibilities.
EZTime expense management lets employees submit receipts from their phone for manager approval.
The IRS expects businesses to keep records that support all income and expenses. For a cash business, that means register tapes or point-of-sale reports, daily sales summaries, deposit slips, bank statements, receipts for expenses and records of any cash paid out. Keep records long enough to support your tax returns; the IRS generally recommends at least three years, and longer in some situations. Paying business expenses in cash makes records harder; pay by check or card from the business account where possible. See opening a business bank account.
All business income is taxable whether received in cash, by card or by check. Cash businesses are often a focus of tax compliance efforts precisely because cash is easy to under-report. Under-reporting can lead to back taxes, penalties and interest, and serious cases can be criminal. Report every sale, keep the records that prove it and work with a qualified tax professional.
Sales tax also applies to taxable cash sales in states with a sales tax. Collect it and remit it on schedule.
Businesses that receive more than $10,000 in cash from one buyer in a single transaction, or in related transactions, generally must file IRS Form 8300 within 15 days and give the customer a written statement by January 31 of the following year. Breaking a payment into smaller amounts to avoid reporting, called structuring, is illegal, and so is helping a customer do it. Train staff who handle large payments, such as in auto sales, jewelry, contracting or event venues, to recognize when Form 8300 applies. Check the IRS instructions for the definition of cash and related transactions.
Federal law allows employees to be paid in cash, but payroll obligations do not change. You still need to:
Paying “off the books” in cash, without withholding or records, breaks tax and labor laws and leaves employees without unemployment and Social Security credits. Most cash businesses are better off paying wages by direct deposit through payroll even when sales are in cash. See wage theft.
Cash attracts robbery. Keep little cash on hand, use drop safes and vary deposit times and routes. Train staff never to resist a robbery, and consider two staff for closing and deposits. Late-night cash businesses face particular risks; see our lone worker safety guide.
Accepting cards adds fees but brings benefits: customers who do not carry cash, larger average sales, automatic records and less cash to protect. Many businesses accept both and encourage the lower-cost option. Compare your processing fees with the cost of handling cash: counting time, deposits, theft risk and errors. Our profit margin calculator helps you see the effect of fees on margins.
A family-run taco truck takes most of its sales in cash. The owners add a simple point-of-sale tablet so every order is recorded, count the drawer with a second person at close, deposit every morning and move wages to direct deposit through a payroll service, with hours from staff clock-ins on a phone. At tax time, their accountant reconciles deposits to sales reports in an afternoon instead of a week.
EZTime records employee hours, breaks and overtime from clock-ins on the mobile app or a kiosk, so wages in a cash business are paid on accurate, recorded hours. Tip pooling keeps a record of tip distributions, tasks handle cash count and closing checklists and approved hours are exported for payroll.
Use our cash count calculator and cash handling policy.
Paying wages in cash does not change payroll rules. Employees still need to be paid at least the minimum wage and overtime when it applies, taxes must be withheld and reported, and you need accurate time records and pay statements. Running payroll through a provider and paying by direct deposit or check is usually simpler and safer. See restaurant payroll basics and pay stub.
Tick each control in place today.
0 of 6. Your cash is at risk. Start with recorded sales and shift counts.
Generally yes, though some states and cities require certain businesses to accept cash. All cash income must still be recorded and reported.
Generally yes. Businesses must file Form 8300 within 15 days when they receive more than $10,000 in cash in one or related transactions.
Yes, but you must still withhold taxes, pay minimum wage and overtime, keep records and issue W-2s.
Generally at least three years for tax purposes, and longer in some situations. Payroll and employment records have their own retention rules.
Federal law limits deductions for non-exempt employees, and many states restrict them further. Get advice first.
Record every sale, assign drawers, count at shift change, require approval for voids and refunds, and reconcile deposits.
EZTime does not run payroll, but it exports payroll-ready reports to Excel and PDF so approved hours reach your payroll provider without retyping. Pricing starts at $2 per employee each month, with a $20 monthly minimum.