What is an Expense Report?
Employees might make countless purchases per day, depending on the size and nature of your business. Be sure to record every business expense, whether it’s for office supplies or business travel. Expense reports are essential!
When people hear the words “expense report”, they simply think of a list of purchases. It’s much more than that, however. In this article, we provide more information on the definition of an expense report, but we don’t stop there. We also break down the difference between different expense reports. You can even look at some examples and templates to get a better understanding.
What is an Expense Report?
By definition, an expense report is a form used to itemize expenses relevant to the function of the business. Trust us, it sounds more complicated than it is. In layman’s terms, it is a form that lists everything you need to know about a business expense. Any time you make a purchase on a company credit card, you should create an expense report. Then, you submit it to your accounting team so that they can update any ledgers, accounts, and reimbursements.
Categories in a Report
In general, most expense reports look the same, but there are a few exceptions. The information typically falls into columns, but the names of said columns may vary depending on your business and the types of purchases. With that said, most expense reports include the same basic data, such as:
- Date of Incurred Expense
- Type/Nature of Purchase
- Vendor Name
- Expense Amount
- Deductions from Amount
- Total Amount
- Head of Account
Functions of an Expense Report
Expense reports exist for two reasons: to reimburse employees and to update tax information.
Why would an employee need a reimbursement?
If they spent their own money on business travel and meals, the company should reimburse them. If they decided to go out for entertainment on their trip, however, reimbursement isn’t necessary.
In addition to helping you properly reimburse your employees, an expense report prepares you for tax time. You can send all of your business expenses to your accountant with these forms. From there, he or she can use them to complete your tax return. Well-kept business expenses add up to great tax deductions.
Small Business Expense Report
If you own a small business, it is all the more important that you submit an expense in a simple form. Many small businesses may ask their employees to pick up something with their own money. They might require employees to pay for their own gas and meals if they don’t have a company credit card for everyone. In these cases, your employees need to keep receipts and create an expense report if they want a reimbursement.
Small businesses also need to keep expense reports to track spending. When you don’t have a dedicated project manager, it’s easy to let one project go over budget. However, accurate reports can ensure that you are on track for your spending goal. They also simplify tax time. Since many small businesses can’t afford in-house accountants, they hire one at tax time. By having all of your expenses organized, you can better prepare yourself for filing your taxes.
An expense report form does more than ensuring an employee is reimbursed. It also ensures that all travel expenses follow your company’s policy. Many companies have strict guidelines for which expenditures are covered and which aren’t. If your employee uses their own money to pay for their meals, lodging, and fuel, they typically get reimbursed for the costs. Companies often have state spending limits in their policy as well. If an employee spends too much, you would see that on the expense report.
Even if your employee is using your credit card, it is still necessary to create an expense report. This helps you to prevent fraudulent charges for entertainment and other expenses that violate your policy. We recommend that you use a receipt scanner app to make reporting easier. Your employees can simply upload their receipts on the go!
As mentioned in our related articles, apps and online expense reports are great tools. You can keep track of any business expense from anywhere. Often times, online apps aid you in reimbursement and tracking expenses. When you upload your receipts, it ensures that that data gets updated instantly. From there, it automatically creates expense reports and played the expenses into the proper categories. Online expense reports may also work hand-in-hand with your bookkeeper software.
As the name implies, a monthly expense report shows all of the expenditures your company made in a month. It is often used to ensure that project budgets are on track, but you may also use it to create a yearly report for write-offs. Doing so saves a lot of time when preparing to file your tax return. Though you can also do daily reports, monthly ones are often enough for a small business.
Expense Report – Example
If you’re still not sure where to begin with reporting expenses, we have an example for you. You may use the example, or you can use it for inspiration. As we mentioned earlier, your related expenses may look different, so it’s okay if your report doesn’t look like the example we provide.
To make reporting your expense even easier, we’ve created a template for you to use. You can provide the template to all of your employees to keep track of your expenses more effectively. It can also be used to ensure that your employees get their reimbursement for any out-of-pocket expenses. You can find templates here.
WellyBox – Automated Report
While a template makes it easier to record your business expenses by hand, we have a better alternative. With Wellybox, you can automatically create an expense report based on employee receipts.
WellyBox uses technology to include paper and digital receipts in your report making. Not only can you scan receipts with your phone’s camera, but you can also scan your email account.
That’s not all!
WellyBox premium plans allow you to scan your employees’ email accounts as well. This ensures that no receipt or invoice gets forgotten. Once WellyBox locates all of your expenses, it imports their data. These details include the date, total amount, client, and any other information to record the business expenses.
Create Expense Reports for Your Small Business
To start reporting your business expenses, download Wellybox today. It is available as an app for every employee, or you can simply use it to scan your own email. Regardless of how large or small your operation is, we are sure you will love the automated features.
Do you have any questions about how WellyBox collects business expenses from your email? If so, don’t hesitate to contact us. You can also check out our related articles which include information on receipts, accounting, and more.