Just like all other movements of funds within a company (or association), expense reimbursements need to be accounted for. In this article, we'll look at how to account for expense claims.
What expenses require an expense report?
Expenses likely to be incurred by an employee on behalf of the company are mainly :
- Travel expenses: petrol, tolls, cabs, trains, parking...
- Mileage costs if the employee uses his or her own vehicle
- Meals and accommodation: hotels, restaurants
The validity of an expense claim
In order to be reimbursed, legislation requires that the expense claim meets certain conditions.
The expense claim must :
- Have a direct link with the company's activity, such as a business meal. In this case, the name and position of each guest, as well as the name of their company, must be mentioned. For mileage-based expense claims, it is mandatory to indicate the reason for the trip, the location of the mission, the mileage traveled and the tax rating of the vehicle.
- Be supported by a document that includes the date, amount and reason for the transaction. This document can be in paper format, but it can also be dematerialized. In fact, there are applications that allow you to send photos of the invoices associated with the transaction directly to the accounting department.
- To be reimbursed to the nearest cent, at the risk of being considered by the tax authorities as a benefit in kind. However, it is possible to opt for flat-rate reimbursement. In this case, the employer pays the employee the same amount each month, according to a scale set by Urssaf.
Accounting for repayments
The accounts to be used to record expenses such as mileage, travel, meals, etc. belong to class 6 (expenses) of the general chart of accounts (PCG).
In particular, we use :
- Account 6251 "Travel" for transport costs,
- From account 6256 "Missions" for food and accommodation expenses,
- From account 6257 "receptions" for restaurant invitations,
- Account 6414 "Miscellaneous allowances and benefits" for mileage allowances, subject to social security contributions,
- From account 421 "Staff remuneration due", for the counterpart on the credit side.
Under the actual expense principle, the amounts entered in these accounts will correspond exactly to the amounts paid by employees, but the company is also authorized to use the same accounts to record flat-rate reimbursements. These entries form part of the payroll and social security accounting entries. In general, the amounts reimbursed appear on the pay slip, either gross or net, depending on whether or not they are subject to social security contributions.
However, the company's expense management policy may provide for reimbursements outside of salary payments.
The VAT issue
The amounts debited to the respective expense accounts are sometimes booked exclusive of tax. In fact, every company (except micro-businesses) has the possibility, if it can, of reclaiming VAT on its expenses.
Unfortunately, some expenses on expense reports are not eligible for VAT deduction. This is the case for the majority of travel expenses (train and plane tickets, parking tickets, car rentals, etc.), with the exception of toll tickets or diesel fuel for a commercial vehicle.
For accommodation and catering, if the invoice includes the required information, is in the company's name and contains VAT, the latter can be deducted. The account to be debited is 4456 "Deductible VAT".
To summarize, an expense reimbursement is entered in the accounts as follows:
- Debit the corresponding expense account (6...): amount excluding VAT
- Debit VAT account (4456): VAT amount
- Credit account 421: amount incl. VAT
Expense accounting is now easier than ever, thanks to a wide range of tools dedicated to expense management. The solutions offered by online accounts, such as the corporate card, are the best way to reduce errors and save time.
Even if many managers are still reluctant to take the step of digitizing their accounting processes, more and more accounting firms are able to help them digitize their data.