Understanding what is an expense report is the first step toward managing your business-related spending. This guide provides clear, step-by-step instructions to help you create accurate reports for faster and smoother reimbursements.
Proper financial tracking is critical, as poor cash flow management contributes to the failure of 82% of small businesses. Mastering this process helps keep your company’s finances and your personal reimbursements on track.
What is an expense report?
An expense report is a document you submit to your employer to get reimbursed for business-related costs you paid for yourself. If you're wondering what is an expense statement, it is essentially the same thing: a form listing each expenditure with details.
Its primary purpose is to create a clear record of your spending, ensuring you are paid back accurately. It also helps the company track where its money is going.
Key components of the report
To understand what does an expense report look like, you should know its essential parts. A standard report typically includes fields for the following information:
- List your name and employee ID, along with the reporting period.
- Record the date each expense was incurred.
- Provide a specific description explaining the business purpose of each cost.
- Assign a category to each expense, such as travel, meals, or supplies.
- Enter the exact amount of each purchase.
- Calculate the final total of all expenses to show the amount you are requesting for reimbursement.
Why are expense reports important?
Expense reports are crucial for maintaining clear financial records that benefit both you and your employer's financial health.
To track and control business spending
Companies use these reports to monitor departmental spending and stick to budgets. Understanding what is an expense account is key, as each cost is logged there, giving a clear view of financial outflows. This visibility prevents overspending.
To simplify employee reimbursements
A standardized report ensures you provide all necessary details for the finance department to approve and process your reimbursement. This system minimizes delays and confirms exactly what you are owed. This helps you get paid faster.
To prepare for tax deductions
Accurate reports provide the detailed documentation businesses need for tax season. The IRS requires companies to maintain thorough records that support all reported business expenses to claim valid deductions. This simplifies audit preparations.
How to create an expense report step-by-step
Follow these five steps to learn how to create an expense report accurately and get your money back without any hassle.
Gather all necessary receipts and information
Start by collecting all your receipts, invoices, and bank statements. Make sure each one clearly shows the date, vendor name, and the total amount paid for your records.
Choose an expense report template
To learn how to make an expense report, check if your company has a set format. If not, you can create one quickly in a standard spreadsheet program.
Fill in the required details for each expense
This is how to write an expense report: carefully enter each expense as a separate line item. Include the date, a clear description of the business purpose, the category, and the exact amount.
Calculate the totals and attach receipts
Double-check your math by summing all individual expenses to get the final reimbursement total. Securely attach digital or physical copies of your receipts to the report as proof of purchase.
Submit your report for approval
Now you know how to do an expense report. Submit the completed form to your manager or finance department according to your company’s policy. Keep a copy for your records.
Expense report examples and templates
Seeing examples can make the process much clearer. Below are two common types of expense reports to show you how they look in practice. You can also copy these layouts directly or adapt them to your company’s needs.
Example of a standard report
Here is a simple report for general business expenses, such as supplies or a client meal. Notice how each line links a cost to its business purpose and category.
Example of a travel report
This example shows expenses related to a business trip, which often includes lodging and transportation. Grouping expenses like lodging and meals keeps your travel budget transparent.
Automate expense reports for faster reimbursements
Creating accurate expense reports is vital for timely reimbursement and financial oversight. However, manually gathering receipts and filling out forms is slow, prone to error, and creates unnecessary administrative work for everyone involved.
The JIM Corporate Card eliminates this process entirely. It automatically tracks and categorizes expenses in real time, ending the need for manual reports and ensuring your team has the funds they need without delays or paperwork.
