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Reimbursements / Advancements to EmployeesMonday 03/26/2012
DwayneDwayne Briscoe / Bookkeeping-Results, LLC
Owner / QuickBook Pro Advisor

888-692-2083 / 713-898-1648
Reimbursing and/or Advancing Monies to Employees for Business-Related Expenses

Companies often are in a situation to which they must either reimburse and/or advance monies to employees for business-related expenses, whether it is travel, office supplies, or general day-to-day purchases.  Because of this, it’s important to have a set policy documenting your company’s procedures in this area.


There are two different arrangements for reimbursement of employee advances, reimbursements and charges for business expenses, and can be noted separately on a paycheck or a separate vendor check, meeting one of the two plan’s criteria in the personnel policies and guidelines.


Accountable Plan


1.         They must have paid or incurred deductible expenses while performing services as your employee.  The reimbursement or advance must be paid for the expense and must not be an amount that would have otherwise been paid for by the employee.  These advances should be received within 30 days time that they incur the expense.


2.         They must substantiate these expenses to you within 60 days time after the expenses were incurred or paid.


3.         They must return any amounts in excess of substantiated expenses within 120 days.


۩ Key Point

Amounts paid under the Accountable Plan are not wages and are not subject to withholding and payment of income, social security, Medicare, and FUTA taxes. 


NonAccountable Plan


1.         Your employee is not required to or does not substantiate timely those expenses to you with receipts or other documentation.


2.         You advance an amount to your employee for business expenses and your employee is not required to or does not return timely any amount he or she does not use for business expenses.


3.         You advance or pay an amount to your employee regardless of whether you reasonably expect the employee to have business expenses related to your business.


۩ Key Point

Amounts paid under the NonAccountable Plan are subject to the withholding and payment of income, social security, Medicare, and FUTA taxes for the first payroll period following the end of the reasonable time period.  Employees may then make an entry on their individual Form 1040, with a further explanation of IRS Publication 529.



About Our Show Advisor: Dwayne Briscoe is the founder and owner of Bookkeeping-Results, LLC.   Dwayne began his company in January 2007, based on the foundation to educate small business owners and bookkeepers who use QuickBooks®.  Working as a full-charge bookkeeper and trainer in a variety of industries for over 15+ years, he is a certified Pro Advisor with 5 certifications, including Enterprise Solutions and Point of Sale.  He is also an instructor at Brazosport College in Lake Jackson, where he teaches basic accounting, QuickBooks®, and basic payroll, along with hosting his own private classes.


Bookkeeping-Results, LLC has focused more on quality and not quantity for their clients, by paying attention to the details.  Through regular continuing education participation, as well as exploring additional ways of “thinking outside of the box” to help expand people’s knowledge of their own financial well being, it’s important to focus on not only saving the client money but also making the client money.

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