A new small business may not have many expenses to track. But as you grow, your expenses will multiply. You’ll need to track how much you’re spending via an expense report form.
An expense report will also make sure you’re prepared come tax time. Many expenses can be deducted from the total amount owed, according to The Balance.
Creating your own expense report doesn’t need to be daunting. Follow the steps below to learn how to make your own expense report quickly and easily.
Not sure what an expense report is? This article includes a straightforward definition and discusses why expense reports are important for small businesses.
Let’s be honest – no one enjoys filling out expense reports. But diligently tracking your spending is crucial for proper financial management, especially if you want reimbursement from your company.
With the right strategies, you can streamline expense reporting to a quick and painless process. This comprehensive guide will teach you how to easily compile thorough, compliant reports to get repaid for all those work-related costs.
Why Good Expense Reporting Matters
Careful documentation serves multiple important purposes
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Get fully reimbursed – Detailed reports justify your eligible expenses, ensuring the company covers the full amount you’re owed
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Improve budgeting – Tracking spending highlights areas where you overspend so you can better control future costs.
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Simplify accounting – Well-organized expense reports integrate smoothly into bookkeeping and make end-of-year accounting easier.
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Adhere to policies – Complete records prove you comply with spending rules and only charge qualified expenses.
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Pass audits – Meticulous reports can substantiate charges if the IRS ever questions a deduction.
Skimping on expense reports may save a bit of time upfront. But the long-term headaches of lost or rejected reimbursement requests make the extra diligence worthwhile.
Step 1: Select the Right Reporting Method
You have two main options for creating expense reports:
Spreadsheet Templates
Excel or Google Sheets let you build a customized template. Define columns for key details like date, expense type, description, amount, etc.
This manual approach offers maximum flexibility. But filling in rows and generating totals still requires effort.
Expense Reporting Software
Dedicated tools like Concur or Expensify provide pre-made report templates. Just select one matching your needs. Features like receipt capture, categorization, and reimbursement workflow automation simplify the process.
If your company already uses reporting software, stick with the established platform. Otherwise, choose the method that fits your use case.
Step 2: Organize Columns and Categories
Logical organization is crucial for clear reports. Group related charges and use columns to capture all necessary details.
Here are some common item types to include:
Expense Date – Date of the transaction
Expense Type – Category like meals, travel, supplies etc.
Description – Brief explanation of the charge
Amount – Transaction total
Vendor – Who you paid
Payment Method – Credit card, cash, PayPal etc.
Receipt – Attachment or link proving the expense
Add or remove columns as needed. Just ensure you have fields for mandatory details required by your company policy.
Step 3: Enter Expenses As You Go
Inputting charges right when they occur makes things easier versus saving receipts until month end. Plus you’ll have all the pertinent transaction details handy for accurate documentation.
Be sure to get itemized receipts showing exactly what you bought. Take photos of paper receipts to simplify attaching images later.
For mileage, record start and end odometer readings for each trip along with the trip purpose and total miles.
Charges made with a company card may auto-populate if your system syncs with reporting software. But confirm all details are correct.
Make notation of any missing receipts so you remember to follow up. Never falsify or duplicate receipts.
Step 4: Categorize Charges Thoughtfully
Grouping expenses into accurate categories is essential. It enables stakeholders to understand your spending at a glance.
For example, segment meals, hotels, transport, internet, supplies, etc. Consult your expense policy, as specific category names may be required.
First determine the major groups. Then consider adding subcategories for detailed analysis. For example, break down transport into mileage, train fare, parking, tolls.
Ideally categories in reports sync up with the general ledger chart of accounts. This eases accounting integration.
Step 5: Double Check Filing Compliance
As a final step before submission, verify the report fulfills all company requirements:
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Itemization – Every charge tied to a receipt or recorded as a mileage log etc. No lump sum estimates.
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Policy compliance – No exceeding per diem limits, lavish expenses etc. Stick to allowable costs.
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Approvals – Any required preapprovals of large expenses attached.
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Coding – Charges classified into proper categories.
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Dates – Transactions fall within current reporting period.
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Calculations – Mileage math accurate. Subtotals by category and total match receipts.
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Foreign currency – Converted to home currency accurately if applicable.
A final thorough review reduces likelihood of rejected or disputed reimbursement requests.
Step 6: Submit the Report Promptly
Don’t let expense reports languish. Submit them quickly to prevent late fees or interest charges on company credit cards.
For software, simply click submit. For manual reports, email the spreadsheet to your manager after signing it. Include receipts as email attachments or shared file links.
If required, print the report to obtain physical approval signatures before sending the scanned version. Just be sure to submit before any deadlines.
Helpful Expense Reporting Tips
Follow these additional pointers for smooth and stress-free expense reporting:
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Take a picture of your odometer at the start of each trip to precisely track mileage.
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For cash payments, ask for an itemized invoice, not just a credit card receipt showing total.
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Attach maps for mileage not between regular office locations.
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Add comments explaining unusual expenses.
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Include all charges made on company-issued payment methods.
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Maintain original paper receipts until reimbursement finalizes.
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If possible, charge as much as you can to simplify documentation.
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Never accept just a summary statement showing total due. Demand receipts for every expense.
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Set reminders to submit reports on time if you have chronic lateness.
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Use an expense app to easily capture receipts and mileage while on the go.
With an organized system and diligent tracking habits, you’ll breeze through expense reporting. You’ll receive prompt and complete reimbursement while keeping accounting and auditors happy. A little consistency goes a long way!
Attach Receipts, If Necessary
Employees submitting expense reports for reimbursement will absolutely need to attach receipts to justify their claims. If printing the expense report, tape the receipts onto a piece of printer paper and photocopy them so you can keep the originals.
If submitting the expense report electronically, scan the receipts using the receipt scanner app and attach them as files. Only then can an employee be reimbursed.
Even if you’re a business owner generating an expense report to track spending, it’s essential to keep your corresponding receipts or invoices. If you’re deducting expenses on your taxes, having a backup is necessary in case of an audit, as advised by The Balance. For small business owners, understanding how to invoice as a sole proprietor is crucial; it aids in ensuring proper documentation of your expenses, facilitates tax deductions, and maintains financial transparency.
How Do You Create an Expense Sheet?
An expense sheet is the same as an expense report. To create an expense sheet, follow the steps above.
In short, the steps to create an expense sheet are:
- Choose a template or expense-tracking software
- Edit the columns and categories (such as rent or mileage) as needed
- Add itemized expenses with costs
- Add up the total
- Attach or save your corresponding receipts
- Print or email the report
How To Create Expense Report on Microsoft Excel
What is a simple expense report template?
This simple expense report template provides a straightforward layout that enables an employee to list and tally business expenses according to category and provide expense details including the category, a short description, and comments.
Do you need an expense report?
In order to be fairly reimbursed, you need to keep track of expenses in an expense report. On the flip side, employers need expense reports to know how much the business is spending and where. Here, we’ll cover the basics of an expense report, how to fill it in, and see an example in action. What Is An Expense Report?
How do I create a free expense report?
There are many free templates of expense reports available online as well as via Excel and Google Sheets. Select the one that works best for your business, customize the columns to fit your business categories, and distribute the template to your employees along with instructions on how to fill one out.
How does an expense report work?
The employees typically attach receipts for the expenses and this is the amount that gets reimbursed. Once submitted by the employee, the business scrutinises the expense report to check for correctness and validity.
