What Is an Expense Account?

Autumn Rivers
Autumn Rivers
Man climbing a rope
Man climbing a rope

An expense account is a financial account from which employees are reimbursed by their employer when they make work-related purchases. In many cases, employees pay for the purchases with their own money and then submit an expense report with attached receipts so they can get their money back. Business trips, career training and client entertainment are all commonly paid for through an expense account. Employees are advised to check with their employer for specifics, though, because companies have different policies. Employees who abuse this system are usually reprimanded or terminated, and may be responsible for paying back the company for expenses not related to work.

The expenses eligible for this type of account tend to vary by company, but there are some work-related costs that nearly always qualify. For example, dining out with a client is usually paid for by the company, as is playing a round of golf or otherwise keeping clients entertained. When meetings with co-workers are necessary, any associated costs are usually added to the expense account, too, which means meals, non-alcoholic drinks and transportation costs should qualify. In addition, classes and books that keep employees up-to-date on their industry are usually paid for by the company via an expense account.

Travel expenses are usually also included, as long as the trip is required for work. Most companies pay for transportation, including plane or train tickets, cab fare and gas. Fees for renting a car and parking also are usually paid by the employer. Most companies pay for hotel accommodations and meals out during a business trip, as well. In general, the use of an expense account during a business trip ensures that employees are not inconvenienced financially, and nearly all necessities should be paid for as long as the receipts are submitted.

Employees with an expense account are often advised to use a credit card when making purchases, so they are not paying out of pocket. Each company generally has a different policy when it comes to reimbursing employees, so the amount of time it takes to get paid back may vary. Another benefit of using a credit card for work-related expenses is that most cards offer extra protection against identity theft and fraud and will allow customers to dispute transactions that they did not approve. Using a credit card also can be an easy way to keep track of purchases so that filling out the expense forms is fast, though the actual purchase receipt is usually still required when submitting the forms.

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