Expense reimbursements seem like a no brainier, but they can be more complex than you think depending on your companies policy. Eric & Ashley have a lot of experience with expense reimbursements and have reviewed many for CFO 4 Your Biz. Below are some tips & general information about when employees submit reimbursements. Most importantly, it is crucial a company have a good expense reimbursement policy in place to help determine if the expense submitted should be allowed or not.
First, expense reimbursements are expenses reimbursed back to the employee tax free. One of the most common expense reimbursements is mileage. In 2018 the standard IRS mileage rate is .545 cents per mile. Most companies use the IRS mileage rate, however you can choose whatever rate you want, just make sure you include it in your companies policy.
Second, expense reimbursements are normally submitted through a form or template with receipts for all of the expenses submitted except mileage. Reimbursements can be submitted as often as the company allows, however normal policies allow submissions once per month, or when you return from the business trip.
Third, depending on how strict your company is, determining if the expenses submitted will be reimbursed & setting up your companies policy is the most difficult part. You should pay close attention to what employees are submitting, taking a coworker out for lunch to discuss a marketing plan, might seen like a business expense, but most companies would not reimburse the expense regularly. Also looking for alcohol charges and checking with a supervisor to see if a business trip was approved are also important.
Although most employees are honest, you will get the occasional rule breaker and you need to pay extra attention to their expense reimbursements. You may also have the rare employee that decides not to submit any expenses and that is fine, but make sure they are aware that they can submit expenses if they chose to.
After looking at your companies expense reimbursement policy, give Eric a call. We can help create the expense reimbursement process and policy, along with advise / feedback on your current policy.