petty cash

Audie Brewton on

Hello all,
I would like to make a brief comment on what my club does
with its petty cash and account (ours now is virtual, and
I'll explain). I have read all the posts so am familiar
with the current discussion and will not reference each of
the facts. I have been a club member since 1998 so have
some experience but I am not an accountant.
Our club treas started Jan 2008 and I transitioned him from
I-Club where petty cash exists - and we never abused it. We
collected extra $$ when we had an expense and needed more in
the acct - we, for example paid the bond expense, renewed
software licenses. Never paid for dinners or things that
were not business. Although members contributions varied
per month the amt of the PC contribution was so small as a %
so each paid the same.
Our partnership agreement specifies a "fine" of $10 when an
assigned equity report was not given so the fines partly
covered our expenses in I-Club.
With bivio and the recommendation to not use PC when a fine
is imposed, the member paying, pays an extra 1$/per-member.
When the contribution is recorded the member is credited
with only $50 and all other members get an extra 1$
contribution for the month - so this is kind of 'virtual'.
The other expenses I described above are equally shared.
Thus there is no need for the creation of a sub account.
I personally feel this is a shortcoming of bivio, but
understand their rationale and perhaps it is for the best.
I think I understand Ira's comment about how the larger
owners 'get more' but that is left for another -thread-
Sorry for the length - the concept is so simple, but many
words are necessary.
Audie Brewton Secretary, Greater North Sub, Chgo

Rip West on

Hi Audie,

Thanks for your description of what your club does with fines and petty cash.I agree with you that the concept is simple, but I never cease to be amazed at how complicated some clubs make it.

Your method of entering fines really consists of the offending member 'giving' each of the other members a dollar, which they use to purchase units. If you wanted to follow your partnership agreement, you could just have the offending member contribute $10 and record it as a fee. That is exactly what 'fees' are for. This results in the every member's worth being increased, but, as opposed to your method, only the offending member's tax basis is increased for the amount of the contribution.

I was confused by your description of how you used to use the petty cash account:

We collected extra $$ when we had an expense and needed more in the acct - we, for example paid the bond expense, renewed software licenses. Never paid for dinners or things that were not business. Although members contributions varied per month the amt of the PC contribution was so small as a % so each paid the same.

As I understand it, you used the petty cash account to pay deductible expenses. This is NOT the purpose for which it was devised. Expenditures from these 'old-style' petty cash accounts are not deducted for taxes by the software.

The other expenses I described above are equally shared.
Thus there is no need for the creation of a sub account.
I personally feel this is a shortcoming of bivio, but
understand their rationale and perhaps it is for the best.
>>

I don't understand that statement. How would a sub-account work and why is it a shortcoming not to have one?

Rip West
Saint Paul, MN

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