Expense Report

Expense Report

An expense report is a document that requests reimbursement of business expenses incurred during a business trip. The statement should contain all relevant information about the expenditure, e.g. B. Dates, amounts and the purpose of the expenses.

An expense report is a mandatory part of most business trips. This allows you to document and track all expenses incurred on a trip.

You should submit the expense report to the person or department responsible for approving the expense. The information is then reviewed, and the expense is either approved or rejected.

If you are planning a business trip, you should familiarize yourself with the expense report process. This way, you can avoid surprises and be sure that you will be reimbursed for their expenses. This article explains how expense reports work.

What are expenses?

coins, banknotes, money

People who are often on business trips or in the field, whether employees or self-employed, have to pay for some professional expenses such as food and accommodation during this time. A professional expense can also be referred to as an expense.

Definition: What is an expense report?

An expense report is a document that usually contains a record of all business expenses incurred by an individual during a specified period, usually a month. Businesses often use you to track and reimburse their employees' business expenses.

In a travel expense report, employees report the costs they have incurred while travelling on business on behalf of their employer, including charges for additional meals, travel expenses, lodging and other expenses. The employer settles these costs after the trip, depending on how much the traveller has paid in advance.

Expense report

 

Costs

When you are on a business trip, you will have many different types of expenses. It's essential to keep track of their costs so their company can reimburse you. There are many different expense categories, and each has its own set of rules and regulations.

Transport costs

With the travel expense report, you can record the outward and return journey, the journey to work and the journey home (in the case of longer journeys). Keep all receipts, as you will only be reimbursed for travel expenses. You can take a flight, hire a taxi, or rent a car, train or private vehicle to get to the desired destination.

Your travel expense report calculates the costs of using your private vehicle on a business trip as follows:

  • The most common form of accounting for motorcycles and mopeds is 20 cents per kilometre.
  • To determine the cost of a business trip, you need to determine the number of kilometres you drive and divide that by your total annual cost of your carAdd in taxes, fuel, interest, depreciation, maintenance, repairs, and insurance, and you get the cost of a given trip.

Additional Meal expenses

For business trips, business travellers can receive a meal allowance of up to 24 euros per day if they do not leave Germany. You get 12 euros per day if you are on a business trip for more than 8 hours daily. This amount can be reduced but not increased. For every full day of a multi-day trip, you get 24 euros. Breakfast at the hotel will be cut if you stay overnight and a client invites you to dinner.

Verpflegungsmehraufwand

Accommodation costs

You must state all accommodation costs incurred when staying overnight abroad in your travel expense report. Accommodation costs include, for example, overnight stays in hotels or holiday apartments. You can claim the accommodation costs in full if you attach the appropriate receipts to the expense report.

Other costs

Additional travel costs, such as telephone and internet costs in the hotel, entrance fees for special events, toll fees and luggage insurance costs, can be included in the expense report.

When preparing your expense report, ensure you put all reimbursable expenses into the correct categories. Also, be sure to keep all receipts for their expenses so you can provide proof if needed.

Small expense allowance

There is a small expense allowance for business trips lasting between 8 and 24 hours and longer business trips where the receipt is valid for both the previous day and the following day. The expense allowance is 14 euros for each day the trip takes place.

Large expense allowance

The daily expense allowance for a 24-hour business trip is 28 euros for each day that the employee is absent from work. The essential accommodation cost is 20 euros each night the employee is not at work.

Why is a travel expense report critical?

The expense report is essential for companies because it helps them track their employees' business expenses. This information is essential for companies to reimburse employees for business expenses correctly. Also, an expense report helps businesses keep track of their expenses.

Companies can better manage their own money when they know how much their employees spend on business travel. An expense report is also essential for employees because you help them keep track of their business expenses.

This information is important to employees so that you can appropriately manage their finances. An expense report also helps employees stay organized and efficient on business trips.

How does an expense report work?

If the expense report is correct, the employer only has to cover the costs. Documentation by the traveller is the most important part of an expense report. Employees must keep receipts and invoices for all expenses incurred - otherwise, they cannot claim expenses.

No receipt, no money. In addition to providing legislative support for employers, the legislature also provides a reason why excessive expense reports can be a good reason for summary termination. In addition to the legislator, excessive or incorrect expense reports can also be a valid reason for termination without notice.

One exception to this rule: tips in the hospitality industry do not have to be billed. It is, therefore, important that all receipts are complete and the expense reports are correct. However, if you want to claim the tip as an expense, you can get a hospitality receipt that already includes it.

The tax authorities accept expense reports in digital format without requiring original receipts from employers. Employers can deduct the expenses of their employees as many business expenses via the expense report.

Reports based on actual costs

Actual travel costs are documented in a carefully maintained logbook by entering per kilometre driven in the logbook. All associated expenses for the expense report must be noted in the logbook precisely as intended.

Alternatively, you can use a vehicle-specific mileage rate to account for their business expenses. With this method, you must keep a logbook that documents all business trips in writing. In the travel expense report, the actual costs are billed precisely over a period of 12 months, e.g., E.g. taxes, insurance, petrol and depreciation.

Benefits of Expense Report
  • By using the expense report, the auditor can verify the details of the expenses as they appear on the company's application.
  • Online expense reports can help track employee spending and identify potential problem areas.
  • You can ensure employees are paid correctly and on time.
  • You can help reduce the risk of fraud and theft by providing paper proof of employee spending.
  • As long as the employees provide the receipts, you can check the details of the expenses.

Improves internal control

The form indicates which items of expenditure can and cannot be reimbursed.

 

Special features of the expense report

The legislator has set flat rates for each country's expense report of business trips abroad. In some countries, the lump sums may vary by city and country.

Below are the three columns that summarize these flat rates on the Internet:

  • Employers who offer their employees local accommodation during a business trip cannot refuse this offer and book a hotel on-site, for example.
  • Business travellers should use a company canteen if one is available.
  • Taxation is based on the 1 per cent method or via a logbook if the company car is used for business trips.
  • The meal allowances are reduced by 20% if breakfast is included in the overnight stay.

Example of an expense report in detail

Example of an expense report in detail:

Travel expenses:

1st business trip to Berlin from April 12th to 14th, 2019:

  • Train ticket 2nd class: €140.00
  • Hotel "Maritim proArte": €480.00
  • Lunch on April 13th

In our example, the employee Max was on a business trip lasting several days in Berlin. He used the company car and covered 700 kilometres during the entire trip. The current mileage allowance is 0.30 euros per kilometre.

This is how Max's business expenses are calculated:

  • Business expenses €210.00
  • Company car: 700 km * 0.30 euro/km = €210.00
  • Business lunch on 04/13: 20% reduction in meal allowance €16.00
  • Business costs for three days in total: 426 €.

Private expenses:

1. Private lunch on 04/13: €16.00

- not deductible as a business expense

2. Petrol for the private use of the company car: €20.00

- not deductible as a business

private expenses: €36.00

total expenses: €462.00

Summary

Business expenses: €426.00 Total

: €36.00 Total

: €462.00

As you can see from the example, employees need to document their business expenses as accurately as possible in order to avoid problems with the company.

For starters, expense report software can be of great help. With this software, you can create expense reports and track their expenses quickly and efficiently.

There are many different expense report software programs on the market. Some are more extensive than others. Choose the program that best suits their needs and budget.

When choosing expense report software, make sure the program is easy to use and understand. It should have a user-friendly interface and be able to generate reports quickly and easily.

Also, the expense report software you choose should be compatible with your operating system. Are you sure the software can generate expense reports in the format you want, e.g., PDF or Excel?

Finally, expense reporting software should be affordable. There are many quality programs at reasonable prices. Before making your final decision, look around and compare features and prices. Try our Shift Base software!

Tips for reporting expenses on your tax return

Employers typically reimburse employee costs through yearly expense reports; Employers should need expense reports with their employee's tax returns. Reimbursements of expenses are generally tax-free for employees.

The employee should only include the business part if an expense is both business and personal. For example, if an employee attends a part business and part personal conference, they would report only expenses related to the business portion of the conference on their tax return.

In addition, employees can fill out the monthly expense report as part of their tax return. This is done by listing the expenses in the "Wage-related expenses" section of the declaration with sub-items such as "duration of incapacity for work" and "meals".

Pro Tip: Tax deductions for business expenses can save you a lot of money. Be sure to document your expenses and business spending carefully and keep all receipts. This will make it easier to prove your expenses if you are audited by the tax authorities.

Conclusion

Employees with salaried field jobs, self-employed workers, and freelancers can submit expense reports to settle travel and meal expenses. On the other hand, the self-employed and freelancers settle their expense accounts via their annual tax returns through income-related expenses instead of using a pre-printed expense report form from the company. 

A company's trip abroad must follow the flat rates established by the destination country in its capacity as a Federal Ministry of Finance legislator. It simplifies the process of reimbursing business travel expenses paid in advance by the group of people who use it. All expenses for upcoming business trips can be reimbursed by settling all travel expenses in the form of a lump sum.

This is how particular expense category, like business meals, are reimbursed: The person making the payment must document the business purpose of the meal by providing the name, title, and business affiliation of the person with whom the meal was held. The date, place, and amount of the expenditure must also be shown. If the documentation is not complete, the entire cost will be considered a private expense.

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