This is a guest post from Michael Hourigan at Shoeboxed.
The key to effortless expense reporting lies in implementing a few crucial best practices that will allow you to seamlessly track your expenses while you’re on the go.
Know What’s Expected
Get clear on what’s expected from you in terms of your reporting.
- How detailed does your report need to be?
- If traveling, how soon will you need to submit your report after returning to the office?
- Does your boss need you to track your expenses as you go, or can you submit a single report at the end of your trip or conference?
- How much time will you need to set aside in order to track expenses as you go?
If you’re responsible for expense reporting while traveling on business or conducting business outside of the office, make sure you have clear answers to each of these questions. If you’re running a business and require reports from your employees or contractors, be sure to clarify what you expect before they begin tracking their expenses.
Go Paperless
Paper expense reporting is inefficient and uneconomical. Receipts and reports can easily get misplaced, especially while traveling and working from remote locations.
Receipt scanners like the Fujitsu ScanSnap and receipt scanning apps like Shoeboxed will help you engage in completely paperless expense reporting. If you have a large stack of documents to scan, simply feed them into the ScanSnap tray and watch your paper clutter become instantly digitized in a matter of minutes. For individual receipts, just snap a picture of the receipt on your smartphone and it will be instantly beamed to your Shoeboxed account. You now have a digital record of each receipt that can be included with your digital expense report.
Once all of your receipts have been scanned, you can recycle the hard copies since the IRS accepts digitized documents as long as they’re clear and legible. From here, you can use a service like Shoeboxed to create one-click expense reports based on various search criteria like categories, dates and amounts.
Know What Qualifies
The best practices for expense reporting involve knowing what qualifies as an expense and what doesn’t.
In general, any purchases you wish to expense must have a direct correlation to growing your business or to making your company money. For example, having lunch with your grandma could not be expensed (unless, of course, her firm is looking to buy you out). On the other hand, a business lunch with a potential client can be expensed, even if the deal ends up falling through.
Check with your company as to how its best practices compare to Uncle Sam’s. While the IRS may only reimburse you for 50% of dining and entertainment costs, your company may pay for up to 100% of those costs, depending on the situation.
If you are a small business owner, it’s a good idea to become familiar with what does and does not qualify as a tax write-off according to the IRS. You can then base your expense reporting on what will count towards your write-offs at the end of the year.
Engage in best practices for expense reporting by getting clear on what can be expensed, digitizing your receipts, and letting cloud-based apps create your reports for you!
(Photo by Michael Hammarström)
