An expense report is a report submitted to a client or employer that details the expenses an employee or contractor has paid while completing a task for the client or employer. Expense reports are also maintained by business owners for tax purposes.
An expense report documents the costs of performing a certain activity, which are passed on to the person, organization or corporation on whose behalf the activity was performed. Normally an expense report only details expenses that the preparer would like to be reimbursed for incurring. Receipts and logs are normally provided in support of an expense report to verify that the expenses were actually incurred.
An expense report is often used to reimburse contractors and employees by ensuring they have complied with an internal expense policy as well as with Internal Revenue Service rules on the deductability of business expenses. Expense reports are also retained to provide proof to the IRS that certain expenses were incurred in the course of business.
The most common expenses for which employees are reimbursed are travel, meals and entertainment expenses.
Airfare, mileage on a personal vehicle, tolls, car rental fees, hotel rooms, meals eaten on the road, tips paid to hotel service workers and airport parking fees are all examples of the expenses many clients or employers will reimburse if an expense report documenting the expenses is provided.
Meals and Entertainment Expenses
Taking a potential client out to lunch, or celebrating a promotion at a bar with a colleague are both examples of meal and entertainment expenses a client or employer might reimburse when provided with an expense report. Before reimbursing, the employer or client may require receipts that document tips and other service charges.
Credit Card Expense Accounts
Many organizations and corporations require that employees pay business expenses using a credit card issued in the name of the employee. The employee is often personally responsible for paying the bill.
The organization or corporation will get a copy of the bill and will reimburse expenses reflected on this credit card bill only when supporting documents such as receipts, logs and business justification is provided in the form of an expense report.
It is important to understand the expense policy or expectations of the client/employer before incurring expenses for which reimbursement is expected. Very few things can sour a client-contractor or employment relationship more quickly than a disagreement over money.
It is often a good idea to keep a copy of receipts submitted with an expense report, in case duplicate submission is required.