In this article, you will learn:
- What is the Expense Report?
- What Should An Expense Report Include?
- 6 Steps To Create An Expense Report: A Guide For Small Businesses
- Expense Report Templates
- Why Do We Need Expense Reports?
- How To Get Paperless Expense Reports?
- Simple Expense Report Template
- Monthly Income and Expense Template
- Expense Sheet Template
- Event Budget Template
- Weekly Expense Report Template
- Business Budget Template
- Personal Budget Template
- Balance Sheet Template
- Travel Expense Report Template
- Business Mileage Tracking Sheet
- Business Expense Reimbursement Form
- Money Manager Template
- Expense Report Templates for Word
- Discover a Better Way to Manage Expense Reporting and Finance Operations
Typically, employees of a small business incur various business expenses out of their own pockets. These expenses are unavoidable for they need to be incurred to run the business.
For instance, travel-related expenses like airfare, travel meals, car rentals, lodging, etc. Or other business expenses like meals, office supplies, or mileage when an employee uses his vehicle for business travel.
Since such expenses form part of business spending, the employees request expense reimbursements from the business entity. Accordingly, such requests are made by the in a document known as the Expense Report.
In this article, we will discuss what is an Expense Report, what should an Expense Reports include, the need for Expense Reports, steps to prepare an Expense Reports, and the Expense Reports template.
What is the Expense Report?
An Expense Report is a form that is used to report business expenses that must be incurred to run the business.
The Expense Reports are typically used by the employees of the company to report various business expenses incurred by them out of their pockets.
So basically, an Expense Report is a form through which the employees request reimbursement of all the business expenses incurred by them on behalf of the company.
The employees typically attach receipts for the expenses incurred that go beyond a minimum amount with the Expense Report.
Furthermore, the business entity scrutinizes the Expense Reports submitted by the employees to check for their correctness and validity.
On finding these as the authorized business expenses, the business entity may reimburse the amounts so requested by the employees via the expense reports.
Post reimbursement, the business entity can record the reimbursed amount as business expenses that impact the accounting profit and the taxable profit of the company.
What Should An Expense Report Include?
As stated earlier, an Expense Report is a document that itemizes or breaks down the business expenses incurred by the employees on behalf of the company.
Further, it requires the employees to attach the receipts associated with such expenses.
An Expense Report can include various details that are particular to your business entity. However, various fundamental details must be included in an expense report. These are as follows:
This is the date on which the expense was incurred. Such a date matches the date specified on the receipt for such an expense.
This is the name of the Vendor from whom a specific item was purchased or the one whose services were availed.
This relates to the type of expense incurred like meals, air tickets, car rental, etc.
This is the total cost of an expense incurred including taxes. Such an amount matches the amount specified on the related invoice.
This refers to the account to which such an expense is to be charged. That is the customer for whom such an expense was incurred. Business entities commonly use Account Numbers to represent customers.
This is a brief account of what each of the business expenses are all about.
Sub-Total For Each Expense
These are the sub-totals for each type of business expense included in the Expense Report. This turns out handy for the bookkeeper to update such information into your accounting software.
6 Steps To Create An Expense Report: A Guide For Small Businesses
If you run a small business, you have employees who incur business expenses out of their own pockets. Hence, you need to keep track of these expenses to know how much you are spending.
This is where an expense report comes handy. Firstly, as a small business, you can keep a check on your expenses. Secondly, you can determine how much your business entity needs to reimburse your employees for the business expenses incurred by them.
Lastly, it provides proper details of a specific expense so that your small business can avail of tax deductions. This is because many business expenses are tax-deductible.
So, preparing an Expense Report helps you itemize each expense so that your accountant can include these expenses in tax forms easily.
It is important to note that the apex tax collection agencies of various countries have defined standard expense categories that they use in the Tax Forms. Thus, you should use these expense categories in your expense reports so that you can fast track your taxes.
The following are the steps to create an Expense Report.
Select a Template or Use an Accounting Software
You can choose between a template and an expense tracking software to create an Expense Report.
So, for creating expense reports, you can either:
Download the Free Microsoft Excel Expense Report Template
Preparing an Expense Report from scratch takes a lot of effort. Hence, many businesses choose the expense report template to create an expense report in Excel, PDF, Word, or other common software.
If you choose an excel template, you can easily enter data item-wise in separate columns and add more columns for additional expense categories. Further, the calculation is fast and accurate as Microsoft Excel automatically calculates the amount in the appropriate columns.
Also, the Microsoft Excel expense report template comes with certain default business expense categories. These make your job easy and can be edited as per the need.
Use Expense Tracking Software to Generate Expense Reports
As a small business entity, preparing expense reports in Microsoft Excel is easy. But as your business grows along with the number of expenses, you need to shift to an expense tracking software.
This is because you can easily connect your bank account with the expense tracking software, download transactions, categorize and add expenses, and get time on your side. You can also capture receipt images through the third-party app integrations that are available with the expense tracking software that automates the process of creating an expense report.
Add or Delete Columns
As mentioned earlier, the Microsoft Excel expense report template comes with standard expense categories. You can edit these based on the type of expenses that your business entity incurs.
For instance, if your employees travel frequently for business needs, you need the ‘Travel and Meals’ column.
Therefore, expense reports help you to itemize expenses by the tax category. This fast tracks your taxes as there are certain expense categories on which deductions can be claimed by you as a business.
Report Expenses as a Different Line Item
Make sure that you report each expense separately in a different line and provide as much detail as possible.
For instance, provide information such as the client for which specific expenses were incurred so that you can track expenses effectively.
Furthermore, report expenses in the order as they have been incurred with the most recent expense towards the end.
Once all the expenses have been reported, add the amount of each expense including the tax amount.
Calculate the Total
As specified earlier, various expense categories have a subtotal as well as the total of all the expenses. Adding subtotals and the grand totals to your Expense Report make expense tracking easy. This is because you can easily see how much money you are spending for each expense category.
Attach Associated Receipts
Expense Reports are requests for reimbursement of expenses incurred by employees who are submitting such a report.
Therefore, they need to provide proof of the expenses incurred by them by attaching the receipts of the associated expenses.
They can provide a scanned copy of the receipts or provide a photocopy depending upon whether they are submitting reports electronically or in a printed format.
Print or Send the Report
Check the totals and subtotals before you print and send the expense report. Expense tracking software allows you to export the expense reports in Excel and PDF formats and send the reports via email.
Expense Report Templates
Expense Report Templates help you to track expenses quickly and easily. However, you would want to shift to an expense tracking software to get time on your side once your business grows, and the number of expenses increases.
Some of the Expense Report Templates that you can use to generate Expense Reports quickly and easily are as follows:
- Free Microsoft Excel Expense Report Template
- Free Microsoft Excel Travel Expense Report Template
- Free Microsoft Excel Mileage Log and Expense Report
Why Do We Need Expense Reports?
There are a variety of purposes for which Expense Reports are needed. These include:
Tracking Expenses Over a Reporting Period
Expense Reports help you to understand how much you are spending as a business entity in respect of specific expense categories.
Thus, you are able to see if any particular expense category is leading to increasing your costs.
As mentioned earlier, the employees associated with small businesses typically incur expenses out of their pocket and ask for reimbursement of the same expenses.
Thus, you need a proper system in place to ensure that the claims being demanded are authorized business expenses.
This is where the Expense Reports come handy. They itemize the expenses which give you an understanding of when, where, and on how these expenses were incurred.
Do Your Taxes Effectively
Many expenses incurred by your employees while at work are tax-deductible. However, you cannot claim tax deductions for such expenses till the time you have a proof of the same.
With the help of Expense Reports, you can keep a track of these tax-deductible expenses which might not reflect in your bank account history.
Thus, this makes it easy for you to claim tax deductions for such business expenses during the tax time.
As stated earlier, your Expense Report must use the IRS’s expense categories so as to Fasttrack your taxes.
For instance, if you are a sole proprietor, you need to use Schedule C to report your business expenses.
Thus, while preparing Expense Reports, make sure that you use the Expense Categories as specified in Schedule C.
The following are a few of the Expense Categories that form part of Schedule C.
- Car and truck expenses
- Commissions and fees
- Contract labor
- Employee benefit programs
- Legal and professional services
- Office expenses
- Pensions and profit-sharing plans
- Rent or lease
- Repairs and maintenance
- Taxes and licenses
- Travel and meals
How To Get Paperless Expense Reports?
Business entities are increasingly going paperless. This is due to the benefits like:
- reduced expenses on office supplies
- no added cost of processing physical reports
- no updating data in the spreadsheet
- saving employees the hassle of submitting physical copies of the Expense Reports
- no missing receipts, etc
These business entities use automated expense report software to generate paperless expense reports. All the employees need to do is simply login to their account and fill in the expense report. Furthermore, they can capture images of the expense receipts and upload them, thus getting rid of the worry of losing paper receipts.
In addition to this, business entities can link their bank accounts to the expense tracking software, categorize expenses, generate and send paperless expense reports within no time.
Simple Expense Report Template
Simple Expense Report Template is a simple sheet that records the date, expense time, and a total of each of the expenses. Further, expenses are reported item-wise with their totals and the reimbursement amount is calculated.
You can make changes to this simple expense report template like adding new columns for specific expense types, changing the column headings to categorize expenses, etc.
Monthly Income and Expense Template
As the name suggests, you can use this template to keep tabs on income and expenses month-on-month. This spreadsheet simply reports income and expenses and calculates the total amount for each of them.
You can even customize to report expenses that you want to keep a check on. In addition to this, this spreadsheet makes it really easy to record monthly and annual expenses as each month is a separate spreadsheet.
Expense Sheet Template
The expense sheet template is again a simple spreadsheet that is made to keep a track of business or personal expenses.
It includes details like the payment method, date of payment, the amount paid to, the amount paid, description, and subtotal of each of the expense categories.
Thus, it gives you a clear picture of the purchases made and other expenses incurred. You can use this expense sheet to prepare a monthly expense report or use it for reference purposes.
Event Budget Template
This template provides item-wise details of both the expenses as well as the revenue sources. It compares the projected figures with the actual amount, thus giving you a clear picture of the gap between budgeted versus actual income and expenses.
In addition to this, this sheet also includes a pie chart showcasing the various expenses and expenses percentages. These expense percentages reveal how much of the total budget is such expense type utilizing.
Weekly Expense Report Template
There are some business entities that require their employees to submit their expense reports on a weekly basis. This is done so that the business entities keep track of the expenses incurred and reimburse their employees for the same on a regular basis.
This expense sheet reports different expense categories on a day-to-day basis. Further, you can make changes to the expense categories as per your need. You can even specify the purpose for which various expenses have been incurred, the expense types, and the subtotals.
Business Budget Template
This expense sheet records the cost of goods and services so that you can keep a check on the business expenses for your small business. You can compare your operating expenses against your income.
In addition to this, the template helps you to report projected and actual income and expenses that help you to plan your budget.
Personal Budget Template
The personal budget template helps you to report your personal income, savings, and expenses item-wise on a monthly basis. It gives you a visual representation of your expenses, income, and savings, much like a dashboard.
Thus, this sheet gives you a clear view of your financial standing as it compares your expenses with your income and savings.
Balance Sheet Template
With the help of the balance sheet template, you can compare your assets and liabilities and get an overview of the financial position of your company. Accordingly, such a template provides useful insights about the financial position of the company to the various stakeholders such as the investors and creditors.
Travel Expense Report Template
The business entities that require their employees to frequently go on business trips can use this template to understand their travel expenses. This template provides details in respect of the business trip expenses like lodging, food and meals, airfare, etc.
It also provides a section where the employees can report those expenses that do not fit into the expense categories specified.
In addition to this, you can even include the purpose of the trip, destination, and contact details of both the employer and the employee.
Business Mileage Tracking Sheet
This is an easy-to-use template for business entities that reimburse their employees for the mileage cost. It includes details like the date of travel, the purpose of travel, odometer start and end readings, total miles, and the reimbursement rate.
You can also include a column for additional comments for reporting the purpose of travel.
Business Expense Reimbursement Form
This is a simple expense report template to record the type of business expenses, the related amount, and the date on which the expenses were incurred.
Further, you can customize this sheet to include more columns as per need. This template is used by the employees to request for reimbursement and by the business entity for keeping a record of such a reimbursement being made.
Money Manager Template
A business entity can use the money manager template to track expenses as well as plan the budget. It itemizes income, expenses, and savings month by month. You can also compare the actual month-end income with the projected month-end income balance and undertake budget planning.
Expense Report Templates for Word
This is a basic expense report template for Word that itemizes expenses. You can report details like the date on which expenses were incurred, the type of expenses, the total amounts, and the employee details. You can even make changes to such a template as per your business need.
Discover a Better Way to Manage Expense Reporting and Finance Operations
Expense reporting is a fundamental part of your business and achieving your financial goals.
A business entity must undertake expense reporting effectively. This is because it enables the firm to track its expenses, reimburse its employees properly, and get an understanding of the actual versus the budgeted spendings.
Accordingly, the business entities need expense tracking software that allows them to do just that. QuickBooks Online Accounting Software helps you as a business entity to track your income and expenses on-the-go.
Connect your Accounts
It enables you to connect your bank accounts, credit cards, Paypal, etc to automatically import transactions.
With Quickbooks Online, you can even automatically expenses into the tax categories. This allows you to claim tax deductions that your business deserves.
Organize Expense Receipts
Quickbooks Online also helps you to capture images of the receipts and save them which get automatically matched with your expenses. Thus, organizing receipts in one place enables you to never miss a tax deduction.
Create and Send Expense Reports
You can even create expense reports within no time and keep a track of your finances. These expense reports provide you with useful information to undertake key decisions and understand the profits or losses that your business is making.
You can even share these reports with your accountants to get a better understanding of the financial standing of your business.