![]() ![]() Nonaccountable plans create taxable income for the employee and payroll taxes for the business. Ensure your expense reimbursement policy meets the IRS rules for accountable plans. Requiring receipts also ensures the company will have the required documentation to support its tax deductions. This makes expense reporting fraud much more difficult. Require receipts along with the expense report. A written policy that explicitly states which expenses qualify for reimbursement-and how reimbursement will occur-can prevent such misunderstandings. Employees may become resentful if they don't receive the reimbursement they expect, while business owners often feel taken advantage of when employees submit unauthorized reimbursement requests. Disputes about expense reimbursement can get ugly without proper communication. Create a formal, written expense reimbursement policy. Expense reimbursement best practices include: However, several other policies offer important benefits. Requiring expense reports represents a great first step in ensuring accurate expense reimbursement. This template captures all information required without overwhelming the employee-it fits on a single page. Microsoft's free expense report template provides a good example of a basic electronic expense report. This usually leads to more accurate information and a better experience for both employees and business owners. However, expense reporting software can make completing and processing expense reports easier. Some businesses use paper expense reports. Expense report templateĭetails provided on the expense report include the date paid, vendor name, the amount paid, expense description, and totals for each expense category. Employees-and sometimes partners and shareholders-use this form to report expenses they pay for the business. Employees generally expect reimbursement for expenses they pay on behalf of their employer.Īt a minimum, companies should require a form called an expense report for all employee reimbursements. This can include business meals, travel expenses, and small purchases of office supplies or equipment. Implementing these ideas before problems arise will save your business time-and money-in the long run.īusiness owners often find it convenient to have employees pay for incidental expenses. Several key policies can significantly reduce the risk of expense reimbursement fraud and improve your company's financial record keeping.
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