Cash Payments

In order to achieve complete and correct accounting records, bills, consignments and dealers can never be paid with cash. Cash payments do not leave a paper trail and cannot be proven to the IRS. Bills, consignments, and dealers are always paid by check only. Petty cash purchases are the only exception – generally items under $20 accompanied by a receipt.

We cannot cash checks written to customers for consignments or buys for the same reason. Even an endorsement on the back of a check does not constitute proof to the IRS that the money was actually paid to an outside agency. To do otherwise is to run the risk of having the expense or the cost of goods disallowed in an audit, and have to pay taxes on it.

The rule is this: we can make no payments by cash to customers, stores or dealers. We can cash no checks written to customers, stores or dealers.