Employee expenses are an unavoidable part of running a business. From buying lunch for a client to travel and entertainment, employee expenses are one of the largest controllable expenses of any business. These expenses eat up a significant portion of your funds and are of great interest to the IRS and other auditors, so you’ll want to make sure your employee expense reports are clear and correct to help you keep the most money in your company’s hands.
Follow these best practices to ensure both you and your employees manage out-of-pocket expenses properly. Sign up for Hydrogen Debit Cards for complete control over your employees’ expenses.
Understand the Law
You need to understand both the federal and state laws regarding reimbursing your employees’ expenses. On the federal level, you’re required to reimburse any expenses an employee puts forth that make their take-home pay fall below your state’s minimum wage. Individual states also sometimes have their own rules, so make sure you understand both sets of laws to avoid any issues.
Create Detailed Policies
You can create a comprehensive, straightforward policy that leaves no room for confusion to ensurer everyone in your company is on the same page for handling expenses and expense reports. Outline the regulations set by the IRS, including what is and is not an approvable expense. Include budgets and limits for each category that would require upper-level approval to exceed.
Having a solid policy can help your accounting department build more specific guidelines regarding expense approvals and refusals. Make sure your policy also informs your employees about expense reimbursement. Most companies set a goal to reimburse purchases within 30 days. Setting a deadline to submit expense reports in order to receive payment on time is another common practice.
Make Accountability Simple
When deciding how you want to receive employee expense reports, make it as easy as possible. Spreadsheets and paper tracking are common but increasingly outdated methods. You may want to look into alternative solutions, such as an app that can automatically record and sort expense information. With Hydrogen spending controls, it’s easier to keep track of employee spending and improve reporting.
Schedule Audits Regularly
Finally, make sure you’re scheduling regular audits so that you can correct any errors and confront any fraud concerns as soon as possible. Your auditor can also help you identify areas where you can improve your finances and cut unnecessary spending. Between these audits, you can use Hydrogen to track your expenses, gauge your progress, and keep on top of your budgets.
Get Hydrogen to Help
When your business uses Hydrogen Debit Cards, it’s easy to keep track of employee expenses and predict expenses for the future. We take the time to standardize, analyze, and aggregate the data so you don’t have to. You can track all of your company’s transactions and calculate cash flows between categories.
If you’re ready to streamline your company’s spending, create your free Hydrogen account today.