Small Business Accounting Cheat Sheet: 25 Tips for Business Owners

Managing travel expense reimbursements is a crucial aspect for businesses that require employees to travel for work. Ensuring clarity on what can be reimbursed, how it should be reported, and staying compliant with IRS rules can prevent misunderstandings and streamline your financial processes. 

In this guide, we’ll walk through everything you need to know about travel expense reimbursement, from defining reimbursable expenses to how tools like Fyle can simplify the entire process.

What Is Travel Expense Reimbursement?

Travel expense reimbursement refers to the process through which businesses compensate employees for any reasonable and necessary expenses they incur while traveling for work. 

These expenses typically include transportation, meals, lodging, and other travel-related costs. 

By having a clear travel reimbursement policy in place, companies can avoid confusion and ensure that employees are fairly compensated for legitimate business expenses while traveling. 

What Travel Expenses Can You Reimburse?

You can reimburse employees for ordinary and necessary expenses incurred when traveling away from home on business. The type of expenses you can reimburse largely depends on the nature of the trip and the specific policies of your organization. 

Here’s a breakdown of reimbursable travel expenses:

• Transportation: This includes airfare, train, bus, or car expenses incurred while traveling between your home and business destination. For example, if you fly from New York to Chicago for a business meeting, the cost of your flight is reimbursable. If you travel by car, you can either claim actual expenses (like gas and tolls) or use the IRS standard mileage rate.
• Lodging: Hotel stays are reimbursable, but be sure to define limits on nightly rates. For instance, if a hotel room costs $250 per night in a major city, but your company has set a maximum reimbursement limit of $200, the employee may only claim up to the $200 limit.
• Meals (non-entertainment related): You can reimburse meals if the trip is long enough to require rest or an overnight stay. This includes food, beverages, and related tips.
• Local Transportation: Employees can claim expenses like taxi or rideshare fares, or car rentals used to travel between their hotel, business meetings, or client sites.
• Miscellaneous expenses: These include necessary expenses like baggage fees, laundry for extended trips, and business phone calls.

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Example

Let’s say an employee drives from Dallas to a business conference in Houston, staying at a hotel overnight. The employee incurs gas expenses of $60, pays $150 per night for lodging, and spends $40 on meals. 

The company will reimburse the employee for the mileage rate equivalent to $60 for gas, $150 for the hotel, and 50% of the meal cost, which comes to $20 (as meals are subject to a 50% deduction limit).

However, if the employee brings a spouse on the trip and books a larger hotel room, only the portion of the expense applicable to the employee’s travel would be reimbursable.

IRS Rules Around Travel Reimbursements

The IRS has clear guidelines to help businesses manage travel reimbursements and ensure compliance with tax regulations. 

Following these rules not only helps businesses stay compliant, but also prevents issues during audits, and ensures employees are reimbursed for legitimate business expenses. 

Here’s a closer look at the key IRS rules businesses should follow:

Actual Cost vs Standard Meal Allowance

Employees can claim the actual cost of their meals, but they must keep detailed records and receipts for each expense. This method is more accurate but requires thorough documentation, which can be time-consuming for both the employee and the employer. 

Standard Meal Allowance Method

The IRS also offers a simplified approach called the “standard meal allowance.” Instead of itemizing meal expenses, employees  can claim a set per diem amount of meals and incidental expenses (M&IE). 

For instance, in 2025, the standard meal allowance is $68 per day for most U.S. locations. This method reduces the need for keeping meal receipts and simplifies the reimbursement process. 

Who can use it?

The standard meal allowance can be used by both employees and self-employed individuals, regardless of whether their travel expenses are reimbursed. 

Benefits

The set rate is easy to use and provides a consistent approach across multiple trips. However, it may not fully cover actual costs in expense locations. 

Travel Inside the U.S.

For business travel within the U.S., businesses can generally deduct the full amount of business-related travel expenses. These include transportation (airfare, car rental, etc.), lodging, and meals (subject to the 50% limitation on meals). More on the 50% limit later. 

Personal Activities During Business Travel

If an employee combines business travel with personal activities (e.g., a vacation), only the expenses related to business can be reimbursed. Personal expenses, such as sightseeing tours or meals during non-business days, are not deductible.

Example: An employee travels to Los Angeles for a 5-day business conference but decides to stay an extra 3 days for personal vacation. The company can only reimburse travel, lodging, and meal expenses for the 5 business days. The costs incurred during the 3 vacation days are personal and not reimbursable.

Multi-Purpose Trips

If the purpose of the trip is primarily personal, with only a minor business component, the trip’s travel expenses cannot be reimbursed as business-related costs.

Travel Outside the U.S.

The IRS imposes more stringent rules on international business travel, especially when the trip mixes business with personal activities. If a portion of the trip involves non-business activities, only part of the travel expenses can be deducted. 

Primary Purpose of Travel

If the primary purpose of the trip is business, the cost of getting to and from the destination is fully deductible. If the trip is mainly for personal purposes, even if some business activities are conducted, travel expenses are not deductible.

Allocation of Costs

For mixed-purpose trips, businesses need to allocate costs between business-related and personal expenses. Only the portion related to business can be reimbursed or deducted.

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Example: An employee flies to London for a week-long business meeting but spends 3 extra days vacationing in Paris. The cost of the airfare to and from London can be deducted, but the cost of traveling to and staying in Paris is personal and not reimbursable.

Conventions and Business Meetings

Expenses related to attending business-related conventions or meetings can be reimbursed. However, certain conditions apply:

Business Purpose

The convention must directly relate to the employee’s job or the business’s operations. For instance, attending an industry-specific conference that offers skill development or business insights would qualify.

Family Members

If an employee brings a family member (such as a spouse or child), their travel expenses are not deductible unless the family member is also an employee with a bona fide business purpose for attending.

Example: If an employee travels to a technology conference in New York and brings their spouse, the company can reimburse the employee’s flight and hotel costs, but the spouse’s expenses (e.g., additional airfare and meals) are not reimbursable unless the spouse has a legitimate business role in the trip. 

Meals and Entertainment

The IRS has specific rules on the deductibility of meals and entertainment expenses. Changes in recent years have tightened the ability to deduct entertainment-related costs.

Meals

Businesses can deduct 50% of the cost of meals, provided they meet the following conditions:

• The meal is directly related to business or associated with a business activity.
• The meal is not lavish or extravagant under the circumstances.
• The employer (or their employee) is present during the meal.

Example: If an employee takes a client out for lunch during a business meeting, the company can deduct 50% of the meal cost.

Entertainment

Since 2018, the IRS has disallowed deductions for most entertainment expenses. This includes costs associated with attending concerts, sporting events, or other recreational activities. 

However, businesses can still deduct 50% of the cost of meals provided at such events as long as they meet the IRS criteria for a business meal.

Exceptions to the Entertainment Rule

Some specific types of entertainment-related expenses are still deductible, including:

• Entertainment Treated as Compensation: If the company treats entertainment as employee compensation (e.g., company-provided tickets to a sporting event that are included in an employee’s taxable wages), these expenses may still be deductible.
• Employee Events: Recreational expenses for employee-only events, such as holiday parties or company picnics, are fully deductible.

Recordkeeping and Documentation

The IRS requires businesses to maintain adequate records of travel-related expenses. Proper documentation ensures compliance with IRS rules and helps businesses defend their deductions during audits. 

Receipts 

For expenses over $75, businesses must maintain receipts or other documentary evidence (e.g., hotel bills and flight itineraries). However, small expenses (under $75) and certain transportation costs may not require receipts.

Records Must Include

• The amount, date, and place of the expense.
• The business purpose of the expense.
• The name and title of the individuals involved in the business meal or meeting (for meals and entertainment).

For more information, please refer to IRS Publication 463 (2023), Travel, Gift, and Car Expenses

How Can You Create a Travel Reimbursement Policy?

A well-defined travel reimbursement policy clarifies what expenses your company will reimburse and sets clear expectations for employees. This ensures responsible spending and simplifies the reimbursement process. Here’s how to create one:

Define Reimbursable Expenses

Start by specifying which types of expenses are reimbursable. Common categories include:

• Business travel: Clarify what transportation, meals, and lodging costs you will cover. Include limits, like mileage rates or daily allowances for meals.
• Business entertainment: If you reimburse entertainment expenses, such as meals with clients, outline the justification required.
• Other business expenses: List professional development, home office supplies, or other expenses that may be reimbursable, along with any spending limits.

Accountable vs Non-Accountable Plans

• Accountable Plan: Under this IRS-compliant plan, employees must report expenses with receipts and return excess reimbursements. The advantage is that reimbursements are not taxable for employees.
• Non-Accountable Plan: This plan doesn't require detailed reporting, but the reimbursement is considered taxable income for employees.

Expense Reporting Procedure 

• Method: Specify how employees should submit expense reports (paper forms, spreadsheets, or expense software).
• Documentation: Require valid proof (e.g., receipts) for each expense type.
• Deadlines: Set clear deadlines (e.g., submit reports within 14 days of a trip).

Communication and Enforcement

• Employee Education: Ensure employees are aware of the policy through regular training.
• Approval Process: Define who can approve expenses based on the amount.
• Consequences: Detail potential penalties for violating the policy, such as non-reimbursement or disciplinary action.

Do I Need Receipts to Reimburse an Employee?

Generally, businesses require receipts to substantiate travel expenses. However, there are exceptions:

• Small Expenses: Receipts aren’t required for expenses under $75 or for transportation expenses where receipts are not readily available. 
• Per Diem Allowance: If employees are reimbursed via a per diem (standard daily rate for meals and lodging), they do not need submit receipts for those expenses. 

Employees should keep detailed records of expenses, including the date, amount, and purpose of each expenditure, even if receipts are not needed.

Are Travel Reimbursements Taxable?

Most travel reimbursements under an accountable plan are non-taxable. This means that if employees properly account for their expenses and return excess reimbursements, the company does not have to report these amounts as income, and employees do not pay taxes on them.

Under a non-accountable plan, reimbursements are considered taxable income. In this case, the company would include the reimbursement amount on the employee’s W-2, and the employee would pay taxes on it.

How Fyle Can Help with Travel Reimbursements

Fyle provides a powerful solution to simplify and streamline the travel reimbursement process. Here's how:

• Real-Time Credit Card Feeds: Employees are notified instantly when business credit cards are swiped. Receipts can be submitted via text message, making reconciliation automatic and efficient.
• Track Receipts: Employees can submit receipts using text message, the Fyle mobile app, Gmail/Outlook, or even Slack.
• Mileage and Per Diem Tracking: Fyle enables accurate mileage and per diem tracking, accommodating different currencies, employee levels, and locations.
• TravelPerk Integration: Fyle integrates seamlessly with TravelPerk to reconcile trip-related expenses and automate travel expense reporting.
• Virtual Cards for Travel: Businesses can issue American Express virtual cards for employee travel expenses, ensuring real-time spending tracking.
• Real-Time Compliance: Fyle’s system automatically monitors and enforces compliance, ensuring that all expenses meet policy standards before reimbursement.
• Direct Reimbursement via ACH: Fyle supports direct reimbursements via ACH, streamlining payments to employees.

Have you ever returned from a business trip with a mountain of receipts and a sinking feeling of dread about the travel expense reports you’d have to submit?

Well, you’re not alone. Sadly, a travel expense report (T&E report) is the key to ensuring your reimbursements arrive on time. We’ll tell you how you can make the process easier and even let you in on a little secret–that you’d never have to spend another second on it ever again. 

How? Read on to find out. 

What is a Travel Expense Report?

Think of a T&E report as a detailed log of your business travel expenses. It documents everything you spent on your trip–from flights, hotels, meals and miscellaneous expenses–for reimbursement by your employer. 

It also serves as a record-keeping tool for the company, ensuring there’s proper visibility into spend and compliance with company policies.

Contents of a Travel and Expense Report 

A typical T&E report includes the following sections:

• Employee Information: Your name and department.
• Trip Details: Destination, travel dates, and the purpose of your trip.
• Expense Categories: This is where you’ll breakdown your spending into clear categories:some text
  • Transportation: Airfare, train tickets, mileage (if using a personal vehicle)
  • Accommodation: Hotel stays, Airbnb rentals.
  • Meals: You can either use a per diem rate (a pre-set daily allowance) or itemize each meal with receipts. 
  • Other Expenses: This includes any miscellaneous business-related expenses like local transportation, laundry charges, or business phone calls. 
• Receipt Attachment: Receipts are crucial for verifying your expenses. Staple or scan them and attach them to your report.

Also Read:

• Business Expense Categories Cheat Sheet: Top 35 Tax-Deductible Categories

Why are T&E Reports Important? 

Travel expense reports are more than a documentation hurdle–they’re really the cornerstone of financial discipline, transparency, and compliance within your organisation. Here’s why they matter:

• Budgeting and Cost Control: Travel expense reports clearly show your company’s travel expenditures. This empowers finance teams to track spending, manage costs effectively, and forecast future travel budgets more accurately. 
• Policy Compliance and Streamlined Reimbursements: Detailed expense reports ensure employees adhere to company travel guidelines. This reduces errors and facilitates timely, accurate employee reimbursements, keeping employees happy and productive. 
• Tax Compliance and Audit Trails: Itemized expense reports act as vital audit trails. They support tax deductions and ensure compliance with regulations, saving your company money in the long run. 

Also Read:

• T&E: Your Complete Guide to Policies, Reimbursements, and Management

5 Ways You Can Simplify Travel Expense Reporting

Conquering travel expense reports doesn’t have to be a battle. Here are some tips you can use:

• Collect and Organize Receipts Diligently: Don’t let receipts disappear in the abyss of your bag or shoebox. 
• Categorise Expenses Accurately: This makes tracking and reporting easier. 
• Submit Expense Reports Promptly: The sooner you submit, the sooner you get reimbursed. 
• Utilize Online or Mobile Apps: These can streamline the data entry process. 

Or use the ultimate choice, a travel expense report software. You can automate the entire process to save yourself (and your company) time and money. 

Templates can be a helpful starting point, but let's delve deeper and explore just how they’d stand up against a travel expense report software.

Travel Expense Report Template vs Travel Expense Report Software 

The age-old question: Should I use a free travel expense report template or pay for travel expense report software? But did you know that a free expense report template might be costing you more than you realise?

Travel Expense Report Template

Travel expense report templates are free and readily available online, making them a seemingly attractive option. They’re simple and the perfect choice for an organization's most basic needs. However, they can be time-consuming (manual data entry), prone to errors, and cumbersome for frequent travelers.  

Did you know? The average expense report takes a massive 20 minutes to process. 

But this is just the tip of the iceberg. Here’s a breakdown of the true time cost when travel expense reports are processed manually: 

• Employee: 5 minutes to fill and file (fiddling with receipts and data entry)
• Manager: 5 minutes to review and approve (chasing down missing receipts or seeking clarifications in the process)
• Finance team: 10 minutes to review, reimburse and reconcile (while correcting errors and chasing for approvals)

The Math Doesn’t Lie. That’s a total of 20 minutes per claim on average. But wait, there’s more! According to the Global Business Travel Association, a shocking 19% of all expense reports contain errors. And correcting each one takes an additional 18 minutes! Suddenly, that 20-minute claim balloons to a 38-minute ordeal. 

Do you feel the time drain? It’s not just you. Imagine the productivity lost for both employees and your finance team. This inefficiency translates to real costs. GBTA found the average expense report costs a staggering $58 to process (and it’s likely that the number is even higher today.)

Let’s crunch these numbers together:

Imagine a company processing an average of 30 expense reports per month. Without errors, that's roughly $21,600 spent annually on the reporting process.  

However, factor in those error corrections, and the annual cost jumps to nearly $33,120. That's over $11,500 wasted on fixing mistakes!  

And it's important to remember this is just an example for a medium-sized company. For larger organizations with higher volumes of reports, the potential cost drain can be even more significant.

While templates seem like a free option, they’re costing you in hidden ways. Consider this: wouldn’t your time and money be spent focusing on core business functions?

Travel Expense Report Software

Now, why is this the superior alternative? Because it can automate the entire process for you at just $11:99 a month. But what does this really mean?

• Automated Receipt Capture: Tools like Fyle let you submit receipts via text message. Employees can text receipts for reimbursable or credit card expenses on the go.  
• Real-Time Credit Card Feeds: Tools like Fyle integrate with all major credit card networks like Visa, Mastercard and American Express to give you instant text message notifications of all credit card spending. 
• Automated Compliance: Travel expense report softwares perform policy checks in real-time to ensure policy violations are caught even before expense reports are submitted. 

A travel expense report software doesn't just save time, it saves money.  Imagine the cumulative effect of automating receipt collection, eliminating errors, streamlining approvals, and boosting employee productivity.

In Conclusion 

Travel expense reports don’t have to be a source of stress. By understanding the purpose, components, and available tools, you can easily navigate the process. 

While free templates can help you get started, exploring a travel expense report software is a no-brainer for growing organizations looking for better efficiency and cost savings. 

Schedule a demo today to see how Fyle can help your travel expense reporting process!

FAQs

How to Save Money on Travel Expenses?

Smart spending habits go hand-in-hand with efficient reporting. Here are some things you can do:

• Compare Travel Options: Look for deals on flights and hotels. 
• Plan Your Meals: Avoid unnecessary dining expenses by packing snacks or researching budget-friendly options. 
• Explore Alternative Transporation: Consider public transportation or ridesharing apps. 
• Leverage T&E Software: Gain insights into your spending habits to identify areas for cost reduction. 

Also Read:

• Corporate Travel Management: From A-Z, Simplified

What Are Acceptable Business Travel Expenses?

This can vary depending on your company’s specific travel policy, so it’s always best to check their guidelines first. Generally, acceptable expenses fall under these categories:

• Transportation: Flights, taxis, mileage, and parking fees. 
• Accommodation: Hotel stays, Airbnb rentals, and incidental charges (reasonable room service or laundry).
• Meals: Per diem rates (a pre-set daily allowance) or itemized receipts for meals considered work-related (business lunches or client dinners).
• Other Expenses: Miscellaneous business-related costs like local transportation, laundry charges, business phone calls, or visa applications.

Pro tip: When in doubt, err on the side of caution and save all receipts. You can always clarify with your finance team later.

Also Read:

• Business Travel Expenses: A Guide to Management, Calculation, Tax Deductions & More

How Long Do I Have To Submit A Travel Expense Report?

This varies by company, but it’s typically within 30 days of your trip’s completion. Some companies might offer shorter deadlines (like 15 days) of een allow for extensions under specific circumstances. Check with your company’s travel policy or finance department for their specific timeframe. 

What Happens If I Lose A Receipt?

Inform your manager or finance team as soon as possible. Depending on the company policy, they might require an explanation or ask for alternative documentation (like credit card statements) to verify the expense.