The Importance of Expense Reports

An expense report is a document that employees use to request reimbursement for business-related expenses. Expense reports typically include a list of expenses, the date and purpose of each expense, and receipts for any expenses that exceed a certain amount.

General expense categories
Example Expense Report

Purpose of Expense Reports

There are several reasons why accurate reporting is essential. First, they help businesses track their spending. By tracking expenses, companies can identify areas where they may be overspending and adjust accordingly. Second, expense reports help companies to comply with tax laws. Businesses can deduct business expenses from their taxable income, but only if they can document them. Properly completed expense reports provide the necessary documentation.

Third, expense reports help to protect employees. If an employee incurs a business expense and their company does not reimburse them, they may be able to claim the cost as a deduction on their tax return. However, the IRS may deny the deduction if the employee does not have documentation to support the expense.

Finally, these reports help to maintain a professional image. When employees submit expense reports timely and accurately, it shows that they are responsible and accountable. This promptness helps to build trust between employees and their managers.

Properly Completing an Expense Report

There are a few things that employees should keep in mind when submitting reimbursement reports. First, they should ensure they only submit expenses eligible for reimbursement. Ask yourself these questions:

  • Were these expenses incurred for a business purpose? Some reimbursable costs include overnight travel, meals with clients, and office supplies. Ineligible expenses include items such as driving to your usual place of work or buying a pair of dress shoes.
  • Were the expenses “ordinary and necessary?” You should not submit lavish costs such as buying an expensive watch to wear to dinner.

Second, they should keep receipts for all expenses that exceed a certain amount. Third, they should submit their expense reports on time.

By following these simple tips, employees can help to ensure that their expense reports are processed quickly and accurately.

Additional Tips

Here are some additional tips:

  • Be sure to include all required information, such as the date, purpose, and amount of each expense.
  • Attach receipts for all costs that exceed a certain amount.
  • Review your report carefully before submitting it to ensure it is accurate and complete.
  • Submit your expense report as soon as possible after incurring the expenses.

Consider using one of these weekly or monthly templates as a guide. By following these tips, you can help to ensure that your expense reports are processed quickly and accurately.