Just in, the Federal Deposit Insurance Corporation (FDIC) has confirmed the seizing of the First Republic Bank by the Regulator. As a result, people are finding alternatives to bank accounts, which is keeping the cash with themselves, of course.
But how secure is that? Is it okay to ditch your bank in 2023? We’ve listed all the pros and cons you would want to consider. So, let’s not extend this introduction and get down to discussing the business real quick!
Who doesn’t want to start their plans and ideas positively? So, here’s the list of scenarios in which keeping cash with yourself seems like a good plan;
Hey, receiving income in cash is still not illegal! No matter how much odd it sounds. But you’ve got to take some precautionary measures. For example, keeping detailed records to avoid miscalculations between the income received and reported.
However, if you’re in a business that involves selling goods or services, simply keeping track of sales is not sufficient. You must also explain your receipts and keep the recent records of sales.
By taking such measures, you can get through the tax authorities’ investigation easily. Though, being aware of such high transactions is necessary.
After income comes the topic of expenses. To better manage and document expenses, keeping receipts for legitimate expenses is important, even when paying with cash. Further, you’ve got to be sure to provide detailed and specific receipts, especially when costs are higher than usual. And you can keep receipts for at least as long as the statute of limitations.
Also, when paying employees in cash, ensure that payroll deductions are accurately accounted for. Additionally, you must provide a detailed payroll stub that outlines the pay period hours and included benefits.
By taking such steps, your record will be saved, and tax and labor laws wouldn’t budge much either!
While managing income and expenses, it’s advisable to keep separate bank accounts for both. It doesn’t matter if you don’t use credit cards or bank accounts; keeping these sections separate helps manage and track records of every detail.
Paying taxes is inevitable. But how can you do this with cash instead of account transfers? Here’s the deal;
You can pay federal taxes with cash, but the IRS recommends considering alternative methods like money orders or prepaid debit cards. Further, if you pay with cash, there are transaction fees, and retail partners only accept payments up to $1,000. In case you want to pay more than $1,000 in cash, you can visit an IRS Taxpayer Assistance Center by making an appointment beforehand.
Also, remember that not all TACs accept cash, and for payments over $10,000, the IRS will confirm the details with you.
We’re done with the first section of the blog. In this second section, we’ll be discussing the situations where keeping cash can be risky;
Sending cash through the mail is not safe. Instead, it’s best to use a money order, according to the U.S. Postal Service. Though it’s legal to send cash by mail. Still, it’s advisable to report amounts over $10,000 entering or leaving the country to U.S. Customs using a Currency Reporting Form (FinCen 105) to avoid penalties.
People love to travel, and it’s understandable to question whether you should keep cash with yourself. Well, here, we suggest being careful.
When traveling with cash, be cautious and keep it secure. If you’re stopped by law enforcement, be truthful and provide receipts if possible, but do not consent to a search. Further, keep your responses brief and consider recording the encounter.
Also, remember that under Civil Forfeiture laws, law enforcement can take your money without charging you with a crime, so be careful.
Traveling outside of the US is more common than you may think. And here’s what to do when you’re keeping cash with you.
When you’re crossing into the United States, there is no set limit on the amount of money you can bring. However, if you have over $10,000 in cash or above, you must fill out FinCen 105 to report it to US customs officials.
Furthermore, it’s better to conduct prior research about your travel decision to avoid mishaps. For example, if you’re traveling to or from a country in the European Union (EU) and carrying EUR 10,000 (which is $10,968.20 US as of today) or more in cash or its equivalents, you have to fill out a cash declaration.
We’ve discussed the most common situations and all the pros and cons. Now, it’s up to you whether you want to ditch your bank in 2023 or continue the association. No matter what you choose, try to keep a record of every transaction to avoid any unnecessary investigation.
Further, you can plan your cash transactions with the new apps and technologies that let you ditch the banks completely.
However, if you’re looking for more insights on finances, check out our latest blogs at Hayvine now!