Employees are more mobile than ever, but how do you determine what is and isn't an acceptable, reimbursable business expense? Learn how to take today's changing staffing dynamics in stride to keep your bookkeeping as simple and accurate as possible.
Employee Business Expenses
Not all employees or staff are chained to a desk in an office. Your company may use a multitude of staffing strategies, such as home-based workers, contracted employees, shared office spaces or mobile employees. Schedules may vary from shift-work or flex schedules to on-call or as needed. Regardless of the type or number of staffing strategies used, a well-defined business expense plan can prevent potential problems with employee reimbursement.
Business expenses are those incurred in order to operate your business. Physical or virtual work spaces, supplies, and transportation and communication expenses are just some examples of what constitutes a business expense. Your company may choose to provide these things for employees, but when you choose not to, you must clearly define what expenses you will and will not reimburse, as well as the accompanying rules and procedures for claiming reimbursement.
Transportation Expenses
All employees need a defined “regular workplace,” whether that’s an office building or their own home. This is because travel to and from the regular workplace is generally considered the employee’s responsibility. When traveling to other work sites, however, employees are usually compensated accordingly. Some examples include:
- Transportation between multiple work sites
- Required client or customer visits
- Meetings away from the regular workplace
- Travel from home to temporary workplaces
Insurance Expenses
Some types of insurance may be necessary for employees to comply with regulations while conducting business. Liability, malpractice, vehicle and natural disaster insurance may be a few of the types of insurance your employees are required to obtain. Allowing for reimbursement schedules for these expenses will help your employees and your business stay safe and in compliance.
Communication Expenses
Staying in constant contact with employees is the new reality. Even if employees are based on-site, many companies are opting for a Bring Your Own Device (BYOD) policy. This allows employees to use the technology they prefer while still meeting the company’s needs. This can also provide your company with a plethora of cost savings as opposed to supplying, maintaining and upgrading technological devices. Devices can include smart phones, tablets, laptops and wearables. Consider options that define maximum reimbursement amounts for the devices themselves as well as payment intervals for the service plans required to use them.
Other Types of Reimbursements
Your company may offer employee incentives as a method of retaining quality staff. Some of these could come in the form of reimbursements for work-related education expenses, upgrades on electronics used for work, or professional memberships to industry organizations.
Company Travel Expense Policies
Travel expenses refer to expenses incurred while traveling away from the employee’s home overnight. The first step in managing employee travel reimbursements is developing a valid and clear expense policy. When you have the proper documentation that explains what constitutes a business travel expense, employees and management alike will have a point of reference. The Society for Human Resource Management (SHRM) provides a template for a starting point for common travel expense policies. The template includes the following sections which may be customized to your company’s needs:
- Overview: Provides a general introduction to the document.
- Authorization and Responsibility: Identifies timelines and authority figures.
- Personal Funds: Warns that personal funds may or may not be used for travel.
- Vacation in Conjunction with Business Travel: Explains the importance of separating costs.
- Exceptions: Notes any necessary exceptions.
- Procedures: Outlines the procedures for each type of permissible travel expense, often divided into prepaid and reimbursable.
- Permissible prepaid expenses may include:
- Airfare
- Rail
- Rental Vehicles
- Conference Registration Fees
- Travel Advances
- Reimbursements may include:
- Airfare
- Rail
- Auto: Personal and rental
- Conference Registration Fees
- Lodging
- Meals
- Business Expenses
- Parking
- Calls
- Tolls
- Miscellaneous
- Non-Reimbursable Travel Expenses: Identifies items not allowed for reimbursement.
- Travel for Non-Employees: Provides rules for family members or friends accompanying the employee if they are not employed by the company.
Consult with your legal team before finalizing to ensure compliance with applicable regulations and company standards.
Many companies choose to define policies and per diem rates, or the allowance for lodging, meals and incidental expenses, according to the US General Services Administration (GSA) rules. This is either for ease of use or to stay in compliance with regulations. The GSA establishes per diem rates within the continental United States (CONUS) and the Department of Defense (DOD) establishes per diem rates for Alaska, Hawaii and non-foreign areas. For international travel, per diem rates are established by the State Department.
Contractor payments should be outlined in the contract. GSA, DOD and State Department rates may or may not apply, as indicated by contract. Another staffing exception is truck drivers. The Department of Transportation regulates per diem rates for this type of travel.
Controller Challenges
Even the most well-defined policies won’t always be followed by all employees. When planning your controller services for the company or looking for outsourced bookkeeping services, make plans to include the following challenges in your course of action:
- Receipt Management
- Missing Data
- Expense Reports
- Payment Requests
- Processing Time
- Visibility
