It isn’t just down to business owners to handle expenses – most enterprises expect all employees to understand this area. Though it can seem like a complex field, really, it isn’t.
So long as they know how it works, staff will be able to spend company money wisely.
To explore the subject completely, follow our ultimate guide.
What Exactly is a Business Expense?
As its name suggests, a business expense is any cost incurred by a company. Often, it’s tax-deductible, meaning that its price can be deducted from the amount of tax that must be paid by your employer.
To qualify as tax-deductible, they have to be able to prove that it was a necessary purchase for the enterprise.
If it’s a payment made exclusively for the running and improvement of a firm – as opposed to a private investment – it’s a tax allowable expense.
In claiming relevant expenses, businesses stand to reduce how much they’re charged for Corporation Tax. That’s why handling business expenses tends to be a major priority for companies.
How Does It Affect Employees?
A responsible company monitors all spending made on its behalf. Perks like Corporation Tax reduction further incentivise directors to manage business expenses.
That’s usually where employees come in. Very often, enterprises require staff to know what they can – and can’t – spend company money on. If an employee doesn’t adhere to these rules, it could affect how much the company pays in tax.
So, firm leaders typically want to limit employee spending to strictly business costs, such as travel to important meetings and office expenses.
To make sure that all payments made with company cash and credit cards are necessary, employers usually ask staff to evidence all purchases made on the company’s behalf.
Which Credit Cards Are Best for This?
As you may already know, credit cards tend to be the main device for business spending – and it’s easy to see why.
Experts predict that by 2026, 60 million card transactions will occur every day. A number of these will likely be done on behalf of companies.
Some providers offer better deals than others, though. And so, almost all employers are keen to secure a cost-effective company account.
Most will look for lenders that guarantee 0% interest for borrowers. This is particularly important if staff need to be reimbursed for business payments that they’ve made using their personal card.
If it takes longer than expected to repay an employee, for example, employees won’t have to fret over accrued interest on their company credit card account.
More often than not, credit card accounts that deliver no interest for as long a period as possible are ideal for covering business expenses.
‘Business expense’ needn’t be a daunting term for employees. With this guide, any staff member could help their company to better protect their assets.