Your sales employees are always on the move. But do you know what slows them down? - Reporting employee travel expenses!
As sales folks, they may incur a varied range of expenses. Some everyday business expenses incurred are transportation, dining, accommodation, and other miscellaneous expenses.
A study conducted by GBTA states that:
“Business travel is estimated to grow to $1.6 trillion in annual spends by the year 2020.”
This means that you can no longer take your business expenses and employee travel expenses lightly. But does your business efficiently manage these expenses? In this article, we look into the key elements that constitute employee travel expenses. Additionally, we understand the protocol behind qualifying these business expenses.
Any business expenses incurred towards a specific business goal completion are known as employee travel expenses. This goal can be a regular client meeting, a closing of a business deal, or even your employees attending a business-related seminar.
As a business looking to streamline their business processes, it is crucial you consistently keep a tab of your company spends. Additionally, insights into these spending patterns and trends can help you cut and optimize costs for your business.
As per IRS regulations, a business spend is considered valid if:
The above are the primary types of business travel expenses incurred by your employees while on a business trip. These expenses can happen either via cash advances provided by the company, using corporate credit cards or prepaid cards, or employees using their own money.
Every state has defined laws and regulations on employee reimbursements and standard mileage rates. Ensure you have an accountable plan to stay compliant at all times. Additionally, ensure you have the right type of customized fields in your expense report template in an attempt to remain compliant.
Expense reimbursement is the process in which the employer repays the employee for any business expenses incurred by him or her during the business trip.
On completing the business trip, the employee needs to report these expenses on an expense report form provided by the employer or the finance team. Once the employee fills in these details, the approver or reporting manager also needs to validate these entries.
The fields entered in an expense report play an important role in streamlining your business processes. Using these fields, finance teams can cross-check and validate the entries found on the expense report form.
Once approved by the finance team, the particular expense report is approved and sent across for payment processing. Care must be taken by the finance teams and employers to ensure that the employee travel expenses comply with the IRS regulations.
An expense report is accepted and pushed into the reimbursement cycle only if it has a direct and clear business agenda behind it. Once processed, the employer is deducted 50% of the cost, and the employees are ideally reimbursed 100% of the expenses incurred by them.
Not staying compliant may not only put you in trouble but can also result in these expenses becoming taxable income.
While a traditional expense report may graze the surface, an automated expense management software can do much more! Fyle helps you monitor and approve spends on-the-go. Additionally, you can access data to all employee spends under one dashboard. Also, Fyle’s real-time policy engine ensures no employee expense claims burn a hole in your pocket.
Increase internal compliance and financial productivity of your organization with Fyle. Schedule a demo to understand how Fyle can address your expense management needs.