If you own a business and have employees, then there is
likely a good chance that you regularly reimburse your employees for spending
related to their jobs. Unfortunately, though, many smaller businesses aren’t as
strict about following up on these”re-fundings” and ensuring that they are
Though this may be a
difficult thing to enact, it will benefit your business and make it much easier
to prove your employee expenses come tax time. In addition to careful tracking
of employee expenses, it is also wise for business owners to consider placing a
cap on employee expenditures.
Eliminate Costs Where You Can
One thing that can help you to save money on employee
expenses and to make your expenses appear more credible to the IRS is to
eliminate any unnecessary spending when possible. Obviously, if you have your
employees traveling, you need to be able to pay for their travel, lodging, and
food while they are away. Most things outside of that, however, are not TRUE
necessities.
If, for example, you cover the cost of your employees’ phones and phone plans or the cost of their pleasure outings while traveling for work, you may want to rethink that decision. These kinds of expenses can look questionable to the IRS and can also cause you to spend more money than you really need to.
While cutting off certain employee expenses may not thrill
your employees, it is often a necessary and worthwhile step for businesses to
take, especially businesses that are struggling financially or that are fearful
of undergoing a highly scrutinous audit in the near future.
Take Deductions When Possible
In addition to putting an end to unnecessary employee
spending on your dime, you should also take a close look at the expenses you
are financing. There is a very good chance that many of them fall under
governmental benefit plans. If, for example, you are reimbursing employees for
relevant educational expenses, you could potentially get reimbursed for those
expenses through tax-deductible government programs.
Your best bet is to work with a financial adviser to
determine which programs exist and, then, if and how you can take advantage of
them. This option provides you with a way to still encourage your employees and
keep them happy without having to foot the entire bill for doing so yourself.
Capping Costs
As mentioned earlier, you will be expected, in most cases,
to take care of employee necessities, such as dining and lodging. However, do
keep in mind that you can control your business’ spending by placing a cap on
employee expenses.
By only giving your employees a certain amount to spend on
food, lodging, and other expenses per day or per instance, you can greatly
reduce the number of employees that take (an unfair) advantage of your kindness
and your overall costs.
While your employees may not love getting “capped” and “reduced”
in these ways, the bottom line is that the tips presented here can help you to
save money while still reasonably providing for those who work for you, and, at
the end of the day, that is what matters most.
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