This guide includes a list of action items to improve your company’s employee reimbursement program.
We see many companies wasting precious time and money on common mistakes that also undermine their IRS compliance.
Here, we’ll give you detailed ways to get your reimbursement program on track.
The most common reimbursement mistake we see is still relying on manual expense reporting. Manual reporting leads to inflation, over-reimbursement, and wasted employee time, especially for mileage. We often see 10–15% mileage inflation with manual tracking/input. It could even open you up to potential compliance issues if the right data isn’t captured.
Furthermore, manual logging burdens your employees with tedious work. After all, you’re not paying people for the task of logging miles, filling out, and approving expense reports.
Setting an accountable program includes setting clear expectations. For example, are employees expected to log their mileage in real-time? Does your finance department flag mileage above a certain threshold?
Commuting between the home and the office does not count as business use. This may come as a surprise to some people, according to IRS Publication 463, commutes are considered personal expenses, not business expenses. Make sure that all your employees know this before they start to track their mileage.
Setting documentation expectations for your team will save time, money, and headache later on. For instance, outline for your team what the appropriate documentation is for an expense to be reimbursable.
Because manual mileage and expense tracking has so many issues, some businesses choose to use reimbursement software. It’s easy to get sold on bloated software that doesn’t do what you need it to—but this is a mistake. Instead, your buying criteria should be centered on saving your business money, improving productivity, and boosting compliance.
We hope you found this guide helpful and feel empowered to take action to improve your company’s employee reimbursement program.
If you are looking for a system that takes care of these items for you, then consider Everlance Business. This digital solution takes the tedious work out of reimbursement and helps you stay compliant with the IRS.
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