What is Expense Report?
A document itemizing business expenses incurred by an employee or freelancer, submitted to request reimbursement or to track deductible expenses.
Definition
An expense report is a formal document used to record, categorize, and submit business-related expenses for reimbursement. It is typically used within companies where employees pay for business costs out-of-pocket and then seek reimbursement from the employer. For freelancers and self-employed individuals, an expense report serves as an internal tracking document to organize deductible expenses for tax purposes. A complete expense report includes the date of each expense, the vendor or merchant name, a description of what was purchased, the business purpose, the amount, and supporting receipts.
Standard Expense Report Fields
A typical expense report includes: Employee/contractor name and contact information; reporting period (e.g., "January 1–31, 2024"); expense categories (travel, meals, supplies, etc.); date of each expense; vendor/merchant name; description and business purpose; pre-tax amount; applicable taxes; total per line item; grand total; approval signature line; and supporting attachments (receipts, invoices).
Expense Categories
Common expense categories include: Transportation — airfare, train tickets, rideshare, rental car, mileage reimbursement, parking, tolls; Lodging — hotel stays during business travel; Meals and Entertainment — client dinners, team meals during travel; Office Supplies — paper, printer ink, stationery; Software and Technology — subscriptions, hardware, domain registrations; Professional Services — legal fees, accounting, consulting; Marketing — advertising, promotional materials, website costs; and Insurance — business liability insurance, health insurance (for self-employed).
Expense Report Policies
Most companies have a formal expense policy that governs what can be claimed: Per diem rates — fixed daily amounts for meals and incidentals, either using IRS rates or a company-set amount; spending caps — maximum amounts per category (e.g., "hotel stays up to $200/night"); pre-approval requirements — certain expenses must be approved before being incurred; receipt requirements — receipts required for all expenses over a certain threshold (often $25 or $75); and prohibited expenses — personal expenses, alcohol beyond limits, luxury upgrades are typically not reimbursable.
Mileage and Per Diem Rates
Two common expense categories that have specific IRS guidelines are: Mileage — for business use of a personal vehicle, the IRS standard mileage rate is used to calculate the deductible amount. The 2024 rate is 67 cents per mile for business driving. Freelancers and business owners can also use this rate for tax deductions rather than tracking actual vehicle expenses. Per Diem — the IRS publishes daily rates for meals and incidentals by city, which employers can use instead of requiring employees to track individual meal receipts. Using per diem rates simplifies the reimbursement process and reduces administrative overhead.