What is a business expense report?

Quick insights

• For some businesses, it can be common for employees to pay out-of-pocket for business-related purchases and receive reimbursement later.
• A business expense report is a form that tracks these purchases for reimbursement purposes.
• A typical expense report includes details like the amount of purchase, date of purchase and the purpose of the purchase.

It can be common practice for small business employees to make purchases on behalf of their employer. They may pay for meals during travel, client outings or car rentals and receive reimbursement through their company.

The purpose of business expense reports is to help businesses track spending to ensure proper reimbursement for employees later. These forms can also help businesses properly document tax deductions, which can help make filing taxes easier down the line.

Below, we cover what is typically included in an expense report, why they can be helpful for small businesses and some best practices for filling them out.

What’s included in an expense report

While expense reports may vary by business, they typically include the following details:

• Employee information (name, contact, department, etc.)
• Total purchase amount
• Date of purchase
• Brief description of purchase
• Account the purchase was originally charged to

Individual expenses are itemized to provide enough detail about each item. Many expense reports also require employees to include receipts for individual purchases.

Itemized purchases in expense reports may also be organized by categories. For example, travel expenses may be grouped together separately from office supply-related expenses.

Other common categories may include mileage, lodging, meals, client-related expenses and internet.

Why small businesses may use expense reports

Regardless of business type, it can be important to keep track of expenses to document them for reimbursement and tax purposes. Here are a few reasons small businesses should consider using expense reports:

Tracking overall business expenses

Creating consistent expense reports allows business stakeholders to see how much money is being spent in a particular timeframe. This may help business owners get a more accurate sense of their budget for a given quarter or year.

Identifying spending patterns

Auditing past reports may help business identify areas where they are overspending or need to cut costs. For example, two employees may be paying for the same software when your business only needs one account. Or maybe the expense reports show that there has been a significant rise in office supply expenses in the last calendar year.

Reimbursing employees

It can be common for employees to use their own money upfront for business purchases. Creating regular expense reports can help streamline the reimbursement process. It may also be useful to set deadlines for monthly expense reports so that employees know exactly when they will be reimbursed each month.

How to create an expense report

If you’re creating a business expense report for your company, these tips may help streamline the process:

• Use a template: Instead of asking employees to create their own reports, create a template to help keep things consistent.
• Attach all receipts: Ensure that the template includes a place for receipts. Otherwise, you may run into issues when filing your taxes.
• Categorize expenses: It can be important to categorize expenses in specific business categories. This can help you organize your budget and be prepared for tax season.
• Consider expense report software: Once you have more than a few employees, you may find it easier (and less time-consuming) to invest in an expense report software that automatically generates reports.
• Create a process: Identify any stakeholders who need to review individual expense reports. For example, a manager may need to review their employee’s expense report before sending it to the person in charge of finance.

The role of business credit cards in expense tracking

Business owners can also use business and employee credit cards for simplified expense tracking. Chase’s business credit cards allow business owners to track individual employee spending and set spending limits.

Plus, having employee credit cards can help allow businesses to forgo parts of the reimbursement process. The Chase Ink suite of business credit cards may offer good credit card options for small business owners.

Considering a business credit card that offers individual employee cards? Explore our credit card marketplace today.

In summary

It can be important to correctly track employee and company spending, and expense reporting can be a straightforward way to do so. It may be wise to create a business expense report template and ensure that employees know to keep receipts for business expenses for tax purposes.