18 Jul Out of Pocket Expenses
How to keep record of Out of Pocket Expenses
On a day-to-day basis most business owners and or their employees will incur some out of pocket expenses such as parking charges, food, business mileage, train fares, stationery and so on. These costs are likely to be claimed back from the company.
The easiest way to deal with these is to use the company credit or debit card; this way the cost will automatically be picked up by the company when reconciling its business bank and credit card accounts.
If it’s not possible to use the company debit or credit card for out of pocket expenses, then either manual or electronic records (e.g Excel Spreadsheet) should be kept.
Ideally, at end of a month, a list should be produced detailing all out of pocket expenses paid by the business owner or their employees which needs to be refunded by the company.
Once the expenses claim has been created and approved, a payment then should be made from the company bank account to the relevant person with the reference “Expenses” for the same amount as the total monthly expense form.
Beware NOT to list any expenses which have already been included on the expenses claim form which been paid from the company bank account; this would mean avoid claiming the same expense twice.
Electronic or hard copies of the receipts should be kept for HMRC. Also any claims made on mileages should have a supporting mileage log.
Simply, a mileage log is a list of business journeys carried out by the business owner or their employees in their own cars. This should show the date, destination, mileage and reason for the trip.
Cloud Accounting App
If accounting records for the business are maintained on a cloud based accountancy solution, then using an app for recording out of pocket expenses is a very simple task. As well as posting the expenses many apps allow you to capture a copy of the receipt or invoice to back up the expense claimed. Using a cloud based accountancy app means that all of the administration can be done and kept in one place for your convenience and peace of mind.