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Some people like to run cash businesses--pocketing the cash received. This is short-sighted and can be downright dangerous.
The IRS can get very creative in going after business owners who pocket cash received. Keep in mind that your own records can indicate discrepancies.
Examples: An upscale restaurant regularly sends out the white tablecloths to a laundry. This can indicate to an investigator just how many meals have been served. When compared to the bank account, a discrepancy might pop into view. Bakeries can be hard pressed to explain the differences between raw materials bought and goods sold. Therapists typically keep an appointment book. When bank deposits do not agree with appointment records, questions will arise that can be hard to explain.
Think carefully about your own situation. Every business keeps records of various types. These can point to a business owner who is pocketing cash.
Example: Robert ran a one-man delivery service for several clients. He picked up groceries from the supermarket and delivered to customers who paid in cash. He expanded to deliver auto parts to garages, restaurant meals to shut-ins, and had an arrangement with a couple of pizza parlors. The payments and tips went into his pocket--until the IRS caught up with him. In an audit of an auto repair shop, an alert auditor noticed the deliveries and that led the IRS to Robert. He could have grown his delivery service into a bigger operation, but he fell into the trap of spending all the cash he received.
Once the IRS gets on a trail, they do not stop. These are people with their own careers to protect. Like any good employee, an auditor is building a reputation and resume.
Example: Bill ran a small printing operation. Frequently, customers paid him in cash. Bill always deposited the cash into his business checking account. This practice kept the records clean and in perfect order. The IRS found no problems when they came calling on a routine audit of the operation.
There are many legitimate ways to get funds out of a business and into your personal account. Talk to your accountant or tax professional. Whatever you do, don't pocket cash received from your customers and clients.
Over a lifetime, I have started up and operated several small businesses. Fortunately, I had good advice from the very beginning. One of the best pieces of advice I ever received was "Never pocket cash received."