Cash receipts need a consistent digital record that connects daily takings, refunds and cash banked. Record business income even when cash is spent directly on supplies, and distinguish owner withdrawals from business expenses.
Use a cash reconciliation rather than treating the bank deposit as total sales. Keep till summaries or other suitable source evidence and investigate unexplained differences.
Record sales when cash is received
Use a consistent sales record that captures cash takings, refunds and relevant adjustments for the business's actual trading pattern. A till summary, booking register or numbered receipt record may form part of the evidence. Keep the date and nature of the sale identifiable. Waiting until cash is banked can omit money spent directly on supplies or withdrawn by the owner before it reaches the bank account.
Self-employed record requirements cover business income and expenses, including cash transactions. The bank deposit is therefore not a reliable substitute for total cash sales. Keep suitable source evidence and a reconciliation that explains how takings become cash held, business spending, drawings and amounts banked. The accounting record should follow the commercial activity rather than only the later movement into a bank account. [1]
Separate the cash movements
Maintain distinct categories for customer receipts, refunds, supplier payments, owner withdrawals and transfers to the bank. Record floats and opening cash so they are not counted as new sales each day. If more than one till or site operates, identify the source of each summary and the person responsible for it. Combining all cash into one unexplained weekly total makes differences much harder to investigate.
Keep evidence for cash purchases in the same way as other business costs. Record the supplier, amount and purpose and link the receipt to the cash entry. A payment made from the till should not simply reduce the sales total. Showing both the sale and the expense preserves a clearer record and allows the tax treatment of the cost to be assessed separately.
Reconcile cash held with the records
Start with opening cash, add recorded receipts and subtract refunds, spending, drawings and banking to calculate the expected closing amount. Compare it with the actual count and investigate differences promptly. Record the count date and the explanation for any adjustment. A cash account that continually grows while little cash is physically held may indicate missing withdrawals or an incorrect recording process.
Use proportionate controls for the size of the business. Where staffing allows, have another person review material differences or banking totals. For an owner-operated business, a documented daily or weekly reconciliation can still provide a useful check. The purpose is to identify errors and preserve evidence, not to assume that every discrepancy is theft or to create an administrative routine nobody can maintain.
Avoid double-counting cash banked
When cash is deposited, record it as a transfer from the cash balance to the bank rather than new customer income if the sales have already been recorded. Match the deposit to the banking record and note any difference between the amount prepared and the amount credited. A bank feed may suggest a sales category automatically, so review those rules before approving deposits in bulk.
Where card and cash takings appear on one till report, split them appropriately and reconcile the card settlement separately. Fees, refunds and timing can make the bank receipt differ from the reported card sales. Do not use one undifferentiated daily total as both cash income and card income. A clear channel split makes the overall sales reconciliation much easier to explain.
Preserve corrections and reporting evidence
If a till summary or cash record is corrected, retain the original and the reason for the change. Identify whether the affected period has already been included in a tax submission. A later cash count should not be used to rewrite earlier sales without evidence. Where historic records are incomplete, document the reconstruction method and uncertainties and obtain advice about the appropriate reporting treatment.
Read Digital record-keeping for sole traders for the wider sole-trader digital record process and Cloud bookkeeping setup to discuss cash bookkeeping controls. Describe how sales are recorded, how often cash is banked and whether money is spent directly from takings. A focused review can then identify the missing reconciliation step and a routine suited to the actual business, rather than assuming a bank feed can capture everything.
Keep access to the sales evidence after a till or booking system changes. Export the relevant reports and check that they remain readable and dated. A cash ledger total without its source summaries may be difficult to support later, especially when staff have changed and nobody remembers the reason for an unusual day or refund.
Illustrative scenario
A market trader pays a stall fee from the day’s cash before banking the remainder. The records show gross takings and the supported fee separately instead of understating both income and costs.
Preparation checklist
- Record gross cash takings
- Keep refund evidence
- Record cash expenses separately
- Reconcile cash held and banked
Frequently asked questions
Is cash banked the same as cash sales?
Not necessarily. Some takings may be spent, withdrawn or retained before banking. Record sales and reconcile the subsequent cash movements separately.
Should cash purchases be deducted directly from the sales total?
Record the income and the business cost separately with supporting evidence. Netting them can hide both the sales amount and the expense treatment.
How is double-counting a cash deposit avoided?
Where sales are already recorded, treat the deposit as a transfer from cash to bank and review any bank-feed rule suggesting new income.
What should be done with an unexplained cash difference?
Investigate promptly, record the facts and preserve the reconciliation. Do not rewrite sales or add an unsupported balancing entry merely to remove the difference.
Official sources
Sources checked: 8 September 2026. Check the linked guidance for subsequent changes.
General information only. The appropriate action depends on your circumstances and the applicable jurisdiction.
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