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How to account for expenses on business trips (How does the business account, or the employee?)

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Business trips are beneficial for everyone.The employer is able to send employees to trainings, to do research, look over product production in another country, or to discuss partnering strategies with other companies.The employee is able to travel on the employer's dime, sometimes visiting far away countries or unique cultures.But how should each account for the expenses of a business trip.

How a Business Accounts for a Business Trip

Many businesses that expect to send employees away on business will set aside money each year in a travel budget.Most of the time there is an account set aside especially for business travel expenses.

Depending on the size of a company and the amount of travel that company expects to do, a company may create sub-accounts in order to account for different parts of a business trip: transportation, food, lodging, supplies, fees, etc.This is effective statistically because it allows a company to review how much it spent on each business trip.If a company feels it has spent too much, it will be able to look at each sub-account to see if there are any feasible ways to cut back.

Most of the time, the company will require that the employee assign each of their purchases to a certain account or sub-account in order to ensure that the employee has made approved purchases and to reimburse the employee if necessary.

How an Employee Accounts for a Business Trip

Companies have varying ways that they require employees to account for a business trip.However, most of them vary off of one general format.When an employee travels, the company will allot a certain amount of per diem for the employee to use on approved purchases: food, lodging, supplies, fees, etc.

Depending on the company and the level of the employee, the company may decide to purchase plane tickets, reserve hotel rooms, and pay fees before the employee ever leaves.However, some companies permit employees to do these things under certain guidelines.

Once on the trip, the employee is required to keep receipts in order to document every purchase.These receipts are as good as money to an employee who is required to use their own money when on a trip, because they will only be reimbursed for purchases that are documented.However, if the employee has been issued a per diem through a credit card, they will need to document each purchase with a receipt or else their employer may require them to return the difference.

Upon returning, many companies will compare the employee's receipts with the purchases made on the credit card.If the employee has used their per diem appropriately, and they have not used all of the per diem, a company may pay them the difference.However, if an employee has made unauthorized purchases or has spent more than they were allotted, they will need to pay back what they owe.

The exact science of documenting a business trip, both from the point of view of the employer and from the point of view of the employee, varies from business to business.However, no matter what system is in place, businesses and employees should ensure that they have accounted for every penny spent and that those expenditures have been placed in the appropriate accounts and sub-accounts in order to ensure the proper expenditure of travel budget funds.

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