Incidental expenses are insignificant expenses linked to business travel. This expense consists of unnecessary travel and entertainment cost that an individual might take during a business tour. An employee, while applying for an incidental expense reimbursement they do not have to show any receipt, only if a minimum amount is filled and the receipt is difficult to obtain. Few examples of incidental expenses that are/may be paid through cash are:
- Baggage handler tips and room service
- Phone bills
How to Pay, Track and Reimburse Incidental Expenses?
- All the policies and procedure of the incidental expenses are written in an organisation’s employee handbook
- The incidental costs categorised as personal or business is limited in quality, quantity, and rupee/dollar amount. Anything above the set amount should be paid by the employee himself/herself
- As per the company procedure, the reimbursement of the incidental expenses might require the employee to pay the expenses out of his pocket or by the company’s card
- Tracking of these expenses are required for accounting and tax purpose
- The employee should keep a record of all the payments and purchases
- The employee should sum up the history in the company’s expense log book with the supporting receipt or bill and submit to the company
- The reimbursement should be done by cheques to make it clear that all the due payments have been reimbursed to the employee
Incidental Expenses of Theft or Casualty
In any organisation, the incidental expenses related to stolen property or damaged property are ordinary if the organisation experience any business theft or casualty. For example, If a company burns down, the company has to pay for all the repair and replace all the equipment. The company might sustain expenses like material moving and storage cost, personal injury and renting a space for a temporary basis.
The above mentioned is the concept, that is elucidated in detail about ‘What are the Incidental Expenses?’ for the Commerce students. To know more, stay tuned to BYJU’S.