Traveling is a pretty common activity that is necessary for employees and business owners to grow their business or fulfill their job responsibilities. During the trip, it’s extremely important to take care of your business travel expense reporting, as in many countries these expenses are tax-deductible (which means big savings for companies). What’s more, keeping track of your business travel expenses properly helps you avoid an unwanted IRS audit notice.
This article will give you detailed instructions on managing your business travel expenses with the Shoeboxed app. Read on to discover!
What are business travel expenses?
Business travel expenses are costs incurred when traveling for business purposes. These expenses include, but are not limited to, the cost of necessary products or services for the trip. The following chart lists some examples:
There are also certain exceptions that your company’s expense policy won’t cover, which include:
- Mini-bar contents
- Parking fines
- Personal vehicles damage
- Corporate card late fees
- Theft losses
How to manage your business travel expenses
There are many ways to keep track of your business travel expenses. We’ve listed five best practices that you can use straight away.
1. Use a company credit/spending card instead of cash
Cash is easy to spend, hard to track, and it’s nearly impossible to match cash spent with receipts. On the other hand, a credit card or debit card will provide you with monthly statements, enabling you to cross-check details with your paper receipts. It’s even better to pay with a business account and credit card, so you don’t mix business expenses with your personal spending. If your company doesn’t provide you with a credit/spending card or you’re self-employed, you can still pay business travel expenses with a separate personal card.
2. Set out a clear expense submission and reimbursement process
Whether you prefer paper forms, spreadsheets, or expense software, having a very clear process will help you keep track of the expense reimbursements. You can create a process and inform all of your employees. This will ensure that you’ll get all the information you need in a timely manner and save people from sending follow-up emails asking about the status of claims.
Here are some process steps you can consider:
- Pre-trip expense projection: The business traveler will complete a projection before their trip, including the estimated spendings, with the manager’s confirmation.
- Receipt and invoice types: The business traveler will need to provide evidence of spending in an agreed document format (e.g., PDF or physical receipts, etc.)
- Expense claim submission timeline: The business traveler will need to submit expense claims within (for example) five working days of the business trip finishing.
- Expense reimbursement period: The company commits to reimburse staff within (for example) 15 to 30 days of the expense claim. During this period, the company can examine and query expenses.
If your company doesn’t use any expense management software, then be sure to have standardized expense report forms accessible to all employees.
3. Organize your receipts properly
To have a comprehensive record of all your business expenses on a regular basis, first you need to organize your receipts properly. It’s a good idea to choose email invoices/receipts instead of paper, but in case you have no choice but to receive paper receipts, store them properly before scanning them into digital data.
Doing this every day is best, otherwise, try to do it twice a week. Everything you spend must be recorded! The more granular your records, the better. Watch out for cash payments, these can be easily forgotten and left off your record, but they’re still business travel expenses. You can also check our 8 simple practices for small businesses to organize receipts efficiently.
4. Turn your paper receipts into digital data
Using a receipt scanning app can make it easier to scan receipts, keep track of and manage your business travel expenses. A receipt scanning app not only saves you from collecting and carrying piles of paper receipts, but they also offer numerous benefits, such as data-loss reduction, security, ease of access, long-term and unlimited storage, court-recognized legal documentation, and so much more.
Many scanning apps which are now available even allow you to create expense reports from your smartphone. Turning your paper receipts into a digital format can simplify your expense tracking, increase your efficiency and get you ready for tax season.
Shoeboxed is a painless receipt scanning and expense management solution for small businesses who are looking for the most versatile accounting app. Shoeboxed helps users scan paper receipts into digital data and create comprehensive and audit-ready expense reports from your receipts. Our human-data verification function will double-check to ensure that your receipts are human-verified, audit-ready, and accepted by both the Internal Revenue Service and the Canada Revenue Service.
Shoeboxed’s exceptional features also allow users to track mileage for business and store business cards, which are essential for business travelers. Check out our step-by-step guide to scan a receipt with the Shoeboxed app!
5. Categorize your spending
Most accounting software or apps come with default suggested categories so you can easily start categorizing your spending. Try to stick to these standard categories as much as possible. It’s crucial, especially when it comes to filing your taxes because you’ll be able to clearly see which areas of your expenditures are higher or lower than they need to be.
The image below shows the Shoeboxed app‘s default expense categories that you can choose from.
The bottom line
It can seem like a daunting task to stay on top of business travel expenses and maintain consistent work performance while you’re working away from your office. But having our guides handy will help you do all this with minimal stress. That’s because clear and simple practices help save you time and hustle, boost your compliance, and allow your managers to spend less time verifying expense reports. Shoeboxed can help you with all of this!