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Expense Account Rules to Live By

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In some cases, employees incur business related expenses that are to be repaid by the employer at the end of a specified period (monthly, weekly, etc.)

Despite the fact that this is common, if your company does not follow the proper guidelines you may find trouble brewing soon enough.

Before we go any further, remember this: an expense account is for work related purposes, not for personal expenses incurred by the employee. This alone is one of the main reasons why proper tracking and reporting is essential.

Although every company has to set its own guidelines for employee expense accounts, here are three tips that anybody can benefit from:

1. Set rules and make sure these are well known. You don't want your employees thinking they have access to company funds to do whatever they please. Set rules upfront, review these in great detail, and expect employees to act responsibly.

2. Don't just approve, but track and review as well. Remember, the expenses incurred by employees can typically be deducted when filing final tax returns. However, as noted by this Market Watch article, "if the IRS stumbles across an expense that it doesn't consider an ordinary and necessary expense, the employer won't be able to deduct the cost."

3. Require receipts to back up all expenses. This is a must, as it will go a long way in keeping employees accountable for their expenses.

Tips for Employees

Do you have access to an expense account? While this is a nice perk, you don't want to abuse the power. Here are three rules to live by:

  • Spend the money as if it was your own
  • Tell the truth at all times
  • It is not okay to tell a few lies here and there

No matter if you are a company owner, HR professional, or employee with access to an expense account, these guidelines will open your eyes and help you better deal with this detail in the future.