Expense Reports for SMEs: What are they and why are they important?
November 25, 2020
By Ben Grossberg
Expense reports are used to record the details of each expense made on behalf of a business. This ensures that financial statements are accurate, out-of-pocket expenses are reimbursed to employees and tax information is collected for claim-back at a later date.
What Is An Expense Report?
An expense report is a hard copy or digital form completed by staff members every time they make a payment on behalf of their company. An expense report typically includes:
- Date of transaction
- Name of the merchant
- Transaction amount
- GST and other tax amounts
- Name of the staff member making the transaction
- General Ledger code
- Tax invoice or receipt
- Additional business coding like cost centres
Expense reports are created with Word or Excel or automated via the use of expense management software like Weel. Once the required information is collected, expense reports are sent through and recorded in the company’s accounting system.
Why Are Expense Reports Important For Small Businesses?
Ensure Your Financial Statements Are Accurate
To make the right strategic and financial decisions for your business you need reliable financial information. Expense reports ensure that all spending across the company is accurately reflected in your Profit and Loss, Balance Sheet and Cash Flow statements.
Maximise Your Annual Tax Return
Businesses in Australia are eligible to claim back GST. To maximise the amount of GST you can claim back from the ATO each financial year the first step is to accurately record all tax expenditure.
Expense reports allow you to collect the GST paid on each expense at the point of sale. Allowing you to accrue and then claim back the total GST expenditure for the year.
Reimburse Out-of-pocket Expenses to Staff Members
SMEs are often unable to get the corporate cards they need for day-to-day business expenses. As a result, employees pick up the slack by using their own money for business expenses. Expense reports allow employees to record and submit out-of-pocket expenses to their employer for reimbursement.
Keep in mind that when collecting expense reports for reimbursement it is important for tax invoices to be provided to prove that the claimed amount is accurate.
How to Automate Your Expense Reports
Expense reporting is a time-consuming yet critical business process. A range of automated technology solutions are available to reduce manual data entry and improve accuracy.
Weel is an award-winning expense management platform built for Australian SMEs. Weel allows you to automate your expense reporting, as well as instantly issue virtual payment cards and control company spending. All from one simple mobile and web app.
Learn how Weel's automated expense reports can help your business save hours of paperwork or schedule a demo to find out with a Weel expert.