With multiple employees traveling to multiple places to carry out business, keeping track of expense claims can get challenging. Hence to simplify the process, companies provide their employees with business travel guidelines that help them keep their business expenses in check.
But does the onus of following these policies to the dot fall only on the employees? Are they to read lengthy guidelines with complex jargon to get reimbursed for their own money?
Tight deadlines, defined targets, and KPIs keep your employees on the run. As a result, they may either tend to forget or might ignore reading through the guidelines altogether. But can we blame them for that?
Hence, to help ease expense reporting for all stakeholders, it is crucial to have well-drafted business travel and expense policy in place. In this article, we discuss how businesses can craft excellent business travel guidelines. Let’s dive in!
What are business travel guidelines?
As a company, business travel guidelines policy serves as a guidebook for you and your employees. Corporate bookkeeping models need their business travel guidelines to adhere to the IRS rules and regulations on employee travel business deductions. The IRS states if you want to use employee travel as a business expense:
- The employee must be carrying on a trade or business that's a necessary expense that helps the company to make a profit.
- The travel expense must also be appropriate for your trade or industry.
- Policymakers must define what constitutes as necessary travel.
- The business travel guidelines should be a user-friendly bullet-points to-do list.
- The to-do list should guide the employee on what they need to record, keep records of, and come back with for reimbursements.
Why do businesses need business travel guidelines for employees?
Employees that don't understand or follow a business travel policy can cause businesses significant problems when it comes to paying for their employee's travel expenses. If that's not bad enough, if a company doesn't follow IRS business travel guidelines, they may not be able to use employee traveling expenses as a tax deduction. Hence, businesses need to have clear instructions for reimbursing travel expenses.
Business travel guidelines need to be crafted and utilized by employees, so they understand the details of the policy and what they need to do to abide by the policy terms. In today's world, you're using employees who are almost perpetually in motion to meet the demands of your business. Additionally, employee staffing structures have changed over the years. Some of these staffing structure changes now include employees that are home-based workers, contractors, and shared office space employees.
Hence, it is the need of the hour to have a detailed business travel policy that encompasses the needs of all these stakeholders. This paves the roadmap for employees to stay compliant with the set policies of your company. Additionally, it also plays a role in ensuring that your employees do not overspend.
Objectives of drafting business travel guidelines
Now that you know what your business travel guidelines need to accomplish, how do you draft the best one? After all, even federal government agencies have to adhere to travel policies!
Ideally, your business travel guidelines should meet five objectives:
- Prevents your company from running into trouble with the IRS for tax issues.
- Streamlines travel reimbursement expenses with clear, outlined procedures.
- Enables your travel booking process to be better organized and efficient.
- Gives your business clear and concise business deductions, if needed.
- Enhances your employee travel experiences with clearly outlined policies.
These five objectives vary in priority from company to company. But they can be easily implemented no matter the size of your company or the purpose of your services.
Must-have’s in your business travel guidelines
Every company is different with diverse ideals, agendas, leadership, and culture. Hence it is essential that your business travel guidelines also incorporate this unique structure and culture. Try to provide a wholesome approach for all the involved stakeholders. This can be done by striking a balance between your company's needs and your employee's expense reporting experience.
1. While developing your corporate travel policy, find one that's easy to use, and offers a robust help menu.
2. Ensure you pick a system travel software that enables you to store and retrieve your travel records digitally.
3. Pick one with excellent customer service to help you through your policy customization.
4. Ensure your business travel guidelines denote how your business will handle employee reimbursements.
Essentials for well-crafted business travel guidelines:
- Approval department details - This encompasses who approves the travel, the itinerary, and the reason for why the employee needs to travel.
- Budget details - This helps provide clarity on how much an employee (based on the type of travel and designation) is allowed to spend on specific categories.
- Air travel - This helps employees understand when and how their air travel gets approved along with monthly or annual set budgets.
- Standard lodging suppliers - This helps employees gain access to suppliers to crack discounts on hotel chains that are approved by the company.
- Car rentals - This helps employees understand the acceptable type of cars allowed for rental purposes and the maximum budget for a daily basis.
Achieving compliance with practical business travel guidelines
Different companies have different business travel guidelines they wish their employees to follow. Some companies want their employees to send in travel receipts and reports via an email system. Others prefer employees to use a smartphone app to document their business travel expenses.
"38% of companies still manually check travel expenses to make sure it meets their evolving travel policy."
Irrespective of your business travel policies, it's best to use an automated solution like an expense management software. The software can also easily incorporate with your company's day-to-day operations. Having a clearly defined reporting or booking process that aligns with a user-friendly expense reporting software for your employees is beneficial to all.
If you're ready to get rid of your travel policy headaches to focus on other critical objectives, schedule a demo with Fyle. Fyle accommodates the needs of your employees while on business travel. Additionally, we ensure your business always stays compliant for maximized tax benefits!