How to write an expense report

1. Business travel:

Small business owners or their employees may need to travel for the sake of the business. For example, there might be an important trade show, conference, or expo out of state. Or maybe you need to check out a new factory or potential vendor. All of the expenses on this trip—accommodation, meals, transportation—should be included on your expense report.

2. Client meetings:

Expense reports should be used to document any spending related to client meetings, such as food, entertainment, and transportation.

3. Office supplies:

All your office supplies should be included in an expense report. This includes one-time purchases (a desk chair) as well as recurring purchases (ink for your printer).

4. Employee reimbursements:

There may be some situations where an employee has to spend their personal funds on behalf of the business. An expense report is an official way to ensure that their spending is accounted for and that they get reimbursed in a timely fashion.

Dos

• Create company guidelines. Formalize a company policy around expense reimbursement and stick to it. This ensures that you and your employees have clear expectations about the types of purchases to expense and will stay within budget. For example, you might set a daily budget for food on business trips. Make sure the rules are unambiguous.
• Receipts, receipts, receipts. Always keep your receipts. They provide proof of your purchases and are important for auditing purposes. 
• Include details. Provide a clear description of each expense. Include as much relevant information as possible: date, amount, purpose, etc. The details will depend on the nature of the expense. For example, if you drive a vehicle for work, you can submit a mileage reimbursement. In this case, you would be paid a certain amount of money per mile, so it would be impractical to note how many miles you covered.
• Keep it timely. Stay on top of your expense reports. An easy way to do this is to submit them at regular intervals, whether that’s every two weeks or by the first of the month. Find a system that works for you so that your financial records stay up-to-date.

Don’ts

• Don’t exaggerate expenses. An expense report needs to accurately reflect your spending. Do not inflate expenses or round up a $27.50 charge to $30.00. This is another place where your receipts come into play—the amount in your report should be an exact match to the amount on your receipt.
• Don’t mix up the personal with the professional. Make sure that you are not blurring the lines between what should and should not be written off as a business expense (client lunch: yes; new suit for an office party: no).

Components

Now that you have an idea of the best way to approach expense reports, you’re ready to get started. There are a few components that all reports should include: 

• Header: In this section, include your name, department, and the reporting period that you are submitting the report. Larger companies with multiple departments might include additional information here, such as employee ID number and the name of their manager.
• Expense details: Create an itemized list of your expenses with the date of purchase, type of expense (business travel, client meetings, etc.), reason for purchase, and amount paid. At the bottom, add up all the expenses and include the total cost. 
• Signature: The person submitting the report should add their signature and the date that they are submitting the report. If employees are submitting expense reports, include an “approved by” section where the appropriate manager can sign off on the expense. 
• Proof of payment: Attach the original receipts to the document. If you are submitting digitally, you can upload a photo of your receipt. 

Accurate and detailed expense reports are a crucial component of managing your small business’s finances. Following the best practices laid out in this article, and working with a finance expert will help make sure that your financial records are reliable.