How to Write an Expense Report for Your Business

An expense report is a financial document that allows individuals to request reimbursement for costs incurred on behalf of their business. It provides employees a formal method to recover out-of-pocket spending related to their work. For companies, these reports track expenditures, manage budgets, and ensure compliance with financial regulations and tax laws. They offer insights into spending patterns, aiding financial planning and cost optimization.

Gathering Necessary Information

Before writing an expense report, collect all relevant information and documentation. This preparatory step ensures accuracy and streamlines the reimbursement procedure. Common categories of reimbursable expenses include travel, such as airfare, lodging, and ground transportation, as well as business meals, professional development, and office supplies. Each company has specific policies detailing what expenses are eligible for reimbursement.

Retaining proof of purchase, such as receipts and invoices, is required for all expenses. These documents should contain the date of the transaction, the vendor’s name, an itemized list of what was purchased, and the total amount paid. For tax purposes, businesses must substantiate expenses, which means providing adequate records that include the amount, time and place, business purpose, and the business relationship for the expense. Digital copies are often acceptable, but clarity and legibility are important.

Beyond receipts, the specific business purpose of each expense is required. This involves explaining how the expense relates to company activities, such as a client meeting, a project, or professional training. Including relevant project codes, client names, or departments helps categorize the expense accurately within the company’s financial system. For expenses incurred in different currencies, recording the original currency and the conversion rate used is important. Organizing these details by date or category before starting the report can significantly simplify the data entry process.

Creating the Expense Report

Once all necessary information is gathered, transfer these details into the expense report. An expense report begins with header information, including the employee’s name, identification number, department, and the reporting period. This identifies the submitter and timeframe.

Following the header, the main body of the report consists of itemized line entries for each expense. For each line item, enter the transaction date, expense category (e.g., travel, meals, supplies), a concise description, and the exact amount. A clear business justification must accompany each expense, explaining its relevance to company operations. For instance, a meal expense might specify “client dinner to discuss project proposal” or “team lunch for quarterly review.”

Attaching or linking the corresponding receipts and supporting documentation to each line item is important. Many digital systems allow direct attachment of scanned images or digital receipts, ensuring all proof of purchase is available for review. Before finalizing the report, a thorough review for accuracy and completeness is important. This includes verifying amounts, checking calculations, confirming required fields are filled, and ensuring adherence to company expense policies.

Submitting and Following Up

After completing and reviewing the expense report, submit it for approval. Common submission methods include online expense management portals, email, or a physical copy to a designated department. Confirm your company’s preferred submission procedure.

Adhering to submission deadlines is important for timely reimbursement, as late submissions may delay payment. Companies often specify a timeframe, such as submitting reports within 30 to 90 days of the expense being incurred. Once submitted, the report enters an approval workflow, starting with a manager’s review, followed by scrutiny from the finance or accounting department.

The reimbursement timeline can vary, but employees generally expect payment within a few business days to a couple of weeks after approval. Retain copies of the submitted expense report and original receipts until the reimbursement is fully processed and received. This provides a personal record and can be helpful if questions or discrepancies arise during the approval or payment process.