Expense Reports

Establishing an Expense Report System

The company must have a standard travel and expense report form even if employee travel is rare. A business that doesn't have a form can check local office supply stores for standard forms, or one can easily be customized through a spreadsheet program to agree with your chart of accounts.

The company should have a clear, written policy on expense reimbursement that includes details such as what is a covered expense, what the filing deadline is, and when receipts are required. Some companies don't require receipts for expenses below a certain amount.

Advice for the Traveling Employee

• Track expenses immediately. Don't wait until you get back from your trip to try to remember the expenses you don't have receipts for, such as tolls and tips. Carry around a small notebook and note the expense right away. If that's not possible, for example you don't want to write a toll in your expense notebook while driving, catch up as soon as you can.
• Keep receipts together. Think of a convenient place such as a suit pocket, purse, or a pocket in your laptop case. Put all receipts there immediately.
• Use your credit card. It is easy to forget to ask for a receipt when paying cash. When you use your credit card, you always get a receipt, so it's one less thing to remember, and as a back up source, your expenses are listed on your credit card statement.
• Submit early. The sooner you ask for the money, the sooner you are likely to get paid.

Corporate Credit Cards

As more of your employees travel, it is important to make expense reports as efficient as possible. One large step you can take is to issue all traveling employees a corporate credit card.

A corporate credit card consolidates all employees traveling expenses on one bill every month. This bill can be broken out by employee to see who spent what where. It allows easier analysis of overall travel expense trends for your business. Expense report software can often integrate with your corporate account, eliminating the need for receipts entirely; however, expense reports may still be required to properly allocate expenses toward special projects or distinct departments.

Credit cards also carry other benefits such as travel insurance and mileage bonuses.

Software Solutions

If your business has few employees who travel then using paper reports and manual processing is fine. As your company grows, expense reporting becomes more of a burden. Software can streamline this process. It can integrate with your corporate credit card to eliminate the need for receipts. Some can be accessed through the web, devices like PalmPilots, and cell phones.

• ExpensAble
• ExpenSite
• Expense Anywhere

Mileage

Mileage expenses are reimbursed when using your personal vehicle for business travel. The reimbursement covers all operating expenses including gasoline, insurance, and maintenance. Parking and tolls are not included in the mileage rate and should be claimed as separate expenses.

An employee's normal daily commute is not a reimbursable expense. Travel that starts or ends at an employee's home on a normal workday will be reimbursed only to the extent it exceeds the employee's normal commute. For example, say an employee normally drives 5 miles to work for a round trip total of 10 miles per day. On a workday he attends a conference 25 miles away instead of driving to work, which is 50 miles round trip. He would be reimbursed only for the 40 miles over his normal commute distance.

Most companies reimburse according to the IRS standard mileage rates and are normally reimbursed on a business expense form through a calculation of IRS mileage rate multipled by actual mileage.

Remember that expense reports are necessary for the business owner as well. A sole proprietor may not be reimbursing himself, but he will be deducting business travel and expenses from his taxes.