Small businesses
Streamline expense reimbursement for your small business
Make reimbursements faster and easier with organized expense tracking that helps your small business stay accurate, compliant, and efficient.
What is expense reimbursement for small businesses?
At the surface, expense reimbursement might seem like it's just paying employees or contractors back for the costs they have out of pocket. But it's much more than that. How you reimburse employees or contractors is critical to driving worker happiness, keeping yourself organized, and even staying compliant with the tax code.
Typical reimbursable expenses include mileage, travel, meals, office supplies, and client entertainment. Having a defined reimbursement policy saves time, prevents disputes, and ensures tax compliance.
Why expense reimbursement matters for small businesses
A solid reimbursement process provides benefits for both business owners and employees:
Financial transparency
Keeps records clear for both taxes and budgeting
IRS compliance
Ensures you meet accountable plan requirements so reimbursements aren’t taxable income
Employee retention
Workers are more satisfied when they aren’t losing money on business expenses
Cash flow control
Helps small businesses manage costs and avoid overspending
Without a structured system, small businesses risk errors, missed deductions, and unhappy employees.
Step-by-step guide to expense reimbursement
Define an expense reimbursement policy
Outline what qualifies (mileage, travel, meals, etc.), submission deadlines, and approval processes
Track business expenses
Employees should submit receipts, logs, or digital reports to verify business costs
Choose a reimbursement method
Standard mileage rate (IRS-approved)
Actual expense method
Fixed & Variable Rate (FAVR) allowance
Process payments
Reimburse employees through payroll or direct deposit, keeping detailed records for tax purposes
Common expense reimbursement categories
Category
Description
Example
Mileage
Business driving costs
Client visits, deliveries
Travel
Flights, hotels, transportation
Attending a conference
Meals
Business meals (50% deductible)
Client lunch
Office supplies
Items purchased by employees
Printers, pens, notebooks
Technology
Work-related software or devices
Zoom subscription, laptop
Reimbursement methods explained
IRS standard mileage rate
Actual expense method
FAVR allowance
Pros
Simple, widely accepted
Reflects true cost
Customized, fairer for employees
Cons
Doesn’t reflect actual costs
Complex, requires receipts
More admin setup required
Everlance supports all three methods, making it easy for small businesses to set policies that fit their needs.
How Everlance simplifies expense reimbursement
Everlance is built for small teams and businesses that need to manage reimbursements efficiently.
Key features for small businesses:
With Everlance, small business owners save hours of admin work, and employees get reimbursed faster and more accurately.
Start using Everlance for your team today!
Download for free“Setting up reimbursements used to be a headache. With Everlance, employees submit everything through the app, and I approve with one click.”
Dana R.,
Small Business Owner
Free tools & resources for small businesses
Expense reimbursement policy template
Create a compliant, ready-to-use policy
Mileage reimbursement calculator
Estimate reimbursements based on IRS rates
FAVR guide
Understand fixed vs variable reimbursement methods
These resources give small businesses the foundation for a professional, compliant system.
Expense reimbursement FAQs
Are reimbursements taxable income?
Not if you follow an IRS-compliant accountable plan. Otherwise, they may be treated as taxable wages.
How much should I reimburse for mileage?
In 2025, the IRS standard mileage rate is 70¢ per mile.
What if employees forget receipts?
Reimbursements should be based on verifiable records. Everlance helps capture receipts instantly to avoid missing documentation.
Can small businesses deduct reimbursed expenses?
Yes. Reimbursed employee expenses are deductible for the business, reducing taxable income.
"Our delivery team logs every mile automatically. Reimbursements are accurate and fast, and the reports keep our accountant happy.”
Mike T.,
Operations Manager
Start simplifying reimbursements today
A clear expense reimbursement process saves time, builds trust, and protects your business at tax time. With Everlance, you can manage mileage, expenses, and reimbursements all in one place.
Generate IRS-compliant reports
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