Let’s start a little more broadly than with the cash book, namely with the accounting obligations of a sole proprietorship. As a self-employed person with a sole proprietorship, you must keep the following:
- A financial diary: consisting of the bank statements and a cash book
- A purchase journal: all invoices and credit notes from suppliers
- A sales journal: all sales invoices and credit notes to customers
- An inventory journal: the value & details of your inventory, if you have to keep a stock, of course.
So a cash book is part of the financial diary, time to zoom in.
A cash book
This is nothing more than a notebook in which you must chronologically record all your cash transactions. Think of cash payments by customers, money that you withdraw from your professional bank account and put in a cash register, any cash payments to suppliers, etc.
Are you a business owner who sporadically receives cash payments or has occasionally paid for a purchase in cash? Don’t worry, you don’t have to start keeping a cash book for that just yet. On the other hand, if cash payments are a structural part of your business, then you are required by law to keep a cash book.
So a cash book has nothing to do with declaring turnover or expenses. Turnover and expenses enter your accounts through sales invoices, purchase invoices, and so on.
Tip!
A cash book only lists transactions that have occurred in cash, nothing else!
Single-entry bookkeeping
As long as you do business through a sole proprietorship and are therefore allowed to do single-entry accounting, you only need to keep your cash book, nothing more! So you don’t have to incorporate that book into your accounts through an accounting program, just keeping records will do.
This is why we talk about single-entry and not double-entry bookkeeping. In single-entry accounting it is enough to keep everything, as far as it is applicable to your business of course, think of a purchase journal, sales journal, financial diary & inventory journal. But no connection needs to be made between those different documents.
In double-entry bookkeeping (as is required for corporations) you would have to keep the cash book, on the one hand, and link it to purchases and sales, on the other. More broadly, you have to make the connections in your accounting program between the different documents (purchase journal, sales journal, financial diary & inventory journal).
Therefore, in double-entry bookkeeping, you should also process the cash book in accounting software so that you can link it to the corresponding documents. So the whole financial flow is double, in addition to processing all your purchases and sales, hence “double-entry accounting”.
Dexxter & sole proprietorships
Dexxter focuses 100% on sole proprietorships with single-entry accounting.
That is why in Dexxter we do not offer the option to process your cash book. That would make the whole accounting of your sole proprietorship quite a bit more complex, while it is not required by law at all!
Dexxter does allow you to keep track of which of your sales and purchase invoices have already been paid, but that does not rely on a cash book. You can simply indicate manually whether a payment has been made or not. That is convenient, because that way you always have an overview and on the other hand you can immediately send a payment reminder for outstanding sales invoices, because we also offer that feature in Dexxter.
Paper or digital?
You can keep your cash book both on paper or digitally, but be careful!
You can’t just take a blank A4 sheet and keep track of your cash transactions on it. Unfortunately, this is insufficient for the law.
The only paper version accepted is an official, green notebook that has the word “cash” (or “kas” in Dutch) on the front. You can easily find the paper version online, but fortunately there are now digital alternatives such as Scrada.
Tip!
Keeping your cash book in Excel is not legally sufficient!
Conclusion
In single-entry bookkeeping, you do not need to link your cash book to the rest of your accounting documents. You do need to fill out and keep the cash book, but no recording needs to happen in your accounts.
