Chapter 3: Finances & Recordkeeping (Keeping the Books)

Official Source: Chapter 3 - Finances and Recordkeeping

Introduction

If Chapter 2 was about paperwork, Chapter 3 is about habits. The Political Reform Act requires you to track every penny in and out of your campaign. If you are audited (and many candidates are), messy records can lead to fines of up to $5,000 per violation.

The golden rule of this chapter: If you didn't write it down, it's a violation.

Part A: The People in Charge

Every committee must have a Treasurer. You cannot legally raise or spend money if the Treasurer position is vacant.

1. The Treasurer

• Role: The person legally responsible for the accuracy of the records and filings.
• Who can do it? Anyone 18 or older. A candidate can be their own treasurer (and often is for grassroots campaigns).
• Liability: The Treasurer signs reports under penalty of perjury. Even if an accountant prepares the forms, the Treasurer is on the hook for errors.
• Duties: Must establish a recordkeeping system, monitor records, prepare statements, and correct inaccuracies.

2. The Assistant Treasurer

• Role: The backup. If the Treasurer is unavailable, the Assistant Treasurer can sign reports and perform duties.
• Liability: If the Assistant Treasurer signs a report, they are liable for its accuracy alongside the Treasurer.

3. The Candidate

• Role: Ultimate oversight. You cannot simply blame the Treasurer if things go wrong. You are required to review statements and ensure the Treasurer is doing their job.

4. Principal Officer

• Who this is for: "Primarily Formed Committees" (groups supporting a candidate but not controlled by them).
• Role: The person who approves the political activity (strategy, content of ads). If this is the same person as the Treasurer, the Treasurer is listed as both.

Part B: The Bank Account

You must follow the "One Bank Account" Rule.

The Rules

1. California Only: The bank must be physically located in California.
2. One Account per Election: You generally use one account for your election.
   • Note: You can have separate accounts for Primary and General elections, but it is not required.
   • Warning: If you run for a different office (e.g., Assembly to Senate), you need a totally new account. You cannot just rename the old one.
3. No Commingling: Never mix campaign money with personal funds or business accounts.
4. Deposits First: If you want to spend your own money on the campaign, deposit it into the campaign account first, then spend it. (Exceptions: You can pay filing fees or the Secretary of State $50 fee directly).

Credit Cards & Petty Cash

• Credit Cards: You can get a campaign credit card. Or, you can designate a personal credit card with a zero balance to be used exclusively for the campaign. You must pay off the card using campaign funds.
• Petty Cash: You can keep up to $100 in petty cash.
  • You cannot make a single purchase of $100 or more with cash.
  • You must track where this cash goes.

A note on Venmo/PayPal: You can spend money using these services, but they cannot be your bank account. You still need a real bank account to feed them.

Part C: Recordkeeping (The 4-Year Rule)

You must keep all records (checks, receipts, bills, bank statements) for 4 years after the date the campaign statement related to them was filed.

Tracking Incoming Money (Receipts)

You need a system to track every donation.

"Date Received" Definition: Money is "received" the moment you or your agent possess it—not when you deposit it.

• Example: If a donor hands you a check on Monday, but you deposit it Friday, the "Date Received" is Monday.

Data You Must Keep:

• Under $25: You just need a daily lump sum total (e.g., "Received $15 in small cash donations").
• $25 – $99.99:
  • Full Name
  • Street Address (Zip Code is mandatory)
  • Amount & Date
  • Cumulative total for the calendar year
• $100 or more:
  • All of the above, PLUS
  • Occupation
  • Employer (or name of business if self-employed)

The LLC Rule: If an LLC donates $100+, you must record the name of the individual responsible for the contribution. You cannot just list "Generic LLC."

The 60-Day Return Rule: If you receive a check for $100+ but don't get the donor's occupation/employer, you must write to them to get it. If you still don't have it within 60 days, you must return the money.

Tracking Outgoing Money (Expenditures)

• Under $25: Daily lump sum total.
• $25 or more:
  • Payee Name and Address
  • Amount
  • Date
  • Description of goods/services (e.g., "Mailer printing," "Office rent").

Gifts, Meals, and Travel: If you spend $100+ on these categories, the recordkeeping is stricter:

• Meals: Date, names of all attendees, and whether they are campaign staff/household members.
• Travel: Dates, destination, names of travelers.
• Gifts: Date, description, and name of recipient.

Part D: Audits

Who checks your math?

• Franchise Tax Board (FTB): Conducts most mandatory audits.
• FPPC: Conducts audits of statewide officers and discretionary audits.

Who gets audited?

• Statewide Candidates: All who raise/spend $25,000+ are audited.
• Legislature/Judges: Randomly selected (25% of districts). If selected, you are only audited if you spent $15,000+.
• Primarily Formed Committees: Audited if they spend more than $10,000.

Action Plan: The Recordkeeping Checklist

FAQ: Common Issues

Q: I can't find a Treasurer. Can I just do it myself? A: Yes. You (the candidate) can be the Treasurer. You do not need a CPA, though it helps to have someone detail-oriented.

Q: I received a $500 check but the donor forgot to write their employer. Can I deposit it? A: Yes, you can deposit it. But you must contact them immediately. If you don't get the info within 60 days, you must refund the $500.

Q: Can I use a personal credit card for the campaign? A: Only if it has a zero balance when you start and you use it only for the campaign. It is usually cleaner to just get a debit card linked to the campaign bank account.

Q: How long do I keep these receipts? A: 4 years. Do not throw them away after Election Day.