How to create an expense report: Step-by-step guide

Expense reports help employees get reimbursed for work-related purchases and give companies a clear record of where money is being spent. They support budgeting, tax compliance, and overall financial accuracy.

Creating an expense report doesn’t have to be complicated. With the right approach and a clear understanding of your company’s policies, you can put together accurate reports that benefit both you and your finance team.

What is an expense report?

An expense report is a formal document that itemizes business-related expenses employees pay out of pocket. It supports timely reimbursement and creates records companies need for tax deductions and financial reporting. Common expenses include:

• Travel expenses: Airfare, hotel stays, rental cars, parking fees, tolls, and mileage reimbursement
• Meals and entertainment: Client dinners, business lunches, coffee meetings, and team meals during work events
• Office supplies and equipment: Printer paper, pens, notebooks, software subscriptions, and small electronics
• Conferences and training: Registration fees, workshop costs, and professional development materials
• Miscellaneous business expenses: Shipping costs, phone bills for work calls, internet service for remote work, and professional association dues

Anyone who spends personal funds on work activities typically needs to submit expense reports. This includes sales representatives traveling to meet clients, managers taking teams out for lunch, or office staff buying supplies for the department.

Why expense reports matter

A well-managed expense reporting process protects both employees and the business from financial and compliance issues.

• Benefits for employees: Timely reimbursement means workers don’t have to float company expenses on their personal credit cards for weeks. Clear documentation also protects them if questions come up about spending decisions.
• Benefits for businesses: Accurate expense reports help you track budget performance, maintain tax compliance with proper documentation, and detect unusual spending patterns that might indicate fraud or policy violations
• Consequences of poor expense reporting: Incomplete or delayed reports can cause cash flow forecasting problems, create tax audit risks, and strain employee relationships due to slow reimbursements

Getting expense reporting right from the start saves time, money, and frustration for everyone involved.

How to make an expense report step by step

Creating an accurate expense report involves five key steps, from gathering receipts to submitting your report for approval. A consistent process helps you avoid mistakes and speeds up reimbursement.

Here's how to do it:

Step 1: Collect and organize your receipts

Handle receipts as soon as you get them. Photograph them on your phone or store paper copies in a dedicated folder so nothing is lost later.

Digital receipt management in apps and expense management software like Ramp lets you capture receipts, extract details, and store everything in one place. Some companies still require original paper copies, so check your policy.

Each receipt must show the vendor name, purchase date, itemized costs, and payment method. Missing information may cause delays.

Step 2: Categorize your expenses

Use your company’s standard categories, such as meals and entertainment, lodging, transportation, and office supplies. Some organizations add subcategories like client meals or ground transportation.

If you’re unsure how to classify an expense, think about its primary purpose or ask your finance team. Keep an eye out for project codes or internal categories your company may require.

Step 3: Fill out the expense report form

Enter the transaction date, vendor name, amount, and a clear business purpose. Aim for descriptions that show why the expense was necessary, such as “Lunch with ABC Corp to discuss Q2 contract renewal.”

Attach a receipt to every line item. Digital tools let you upload images directly; for paper workflows, number receipts and match them to the form.

Complete every required field. Missing details often trigger rejections in approval systems.

Step 4: Calculate totals and review

Verify subtotals and your grand total to ensure they match your receipts. Math errors are a common reason reports are sent back.

Review each item against your company’s travel and expense policy. Check per-diem limits, per diem rules, and any spending caps.

Before submitting, look for duplicate entries, personal charges, missing receipts, or incorrect currency conversions.

Step 5: Submit for approval

Follow your company’s submission deadline so reimbursement isn’t delayed or denied.

After you submit, your report typically goes to your manager and then to finance. Most companies reimburse within two to four weeks, but timelines vary.

If approval stalls, send a brief follow-up email. Reports often get held up because someone is out of office or needs clarification.

Expense report best practices

Following these best practices will help you avoid common pitfalls and keep your expense reporting process running smoothly.

• Submit reports promptly: Aim to submit within 30 days. Timely reporting helps your finance team close books accurately and speeds up reimbursement.
• Keep detailed notes about business purpose: Record why each expense was necessary while details are fresh. Include who attended, what was discussed, and any key outcomes.
• Understand your company’s expense policy: Review your organization’s travel and expense policy regularly. Knowing spending limits, approval rules, and prohibited expenses helps prevent rejections.
• Maintain backup copies of documentation: Save digital copies of receipts, confirmation emails, and completed reports in case something gets lost in the approval process
• Be honest and accurate with submissions: Report expenses exactly as they occurred. If you mistakenly use a company card for a personal charge, note it clearly and arrange reimbursement.

Expense report templates and tools

The right template or software can simplify expense reporting and reduce errors, whether you prefer spreadsheets or automated solutions.

Free expense report templates

You can find free templates through Microsoft Office, Google Workspace, and accounting software sites such as QuickBooks and FreshBooks. Many business resource sites also offer downloadable versions in Excel, Google Sheets, and PDF formats.

Look for templates that include fields for the date, vendor, expense category, amount, payment method, and business purpose. The most helpful templates include built-in formulas for calculations, separate sections for different expense types, and space for manager approvals.

Customize any template to match your company’s needs. Add project codes, remove unused categories, or adjust currency formats for international expenses.

Here’s a simple example of what a completed expense report line-item table might look like:

Expense management software

Automated expense management software removes manual data entry, reduces processing time, and helps prevent errors. A Forrester study commissioned by Ramp found that automation saved employees a total of 2,280 hours per year.

These tools sync with corporate credit cards to import transactions automatically, flag policy violations in real time, and route reports through approval workflows. Popular platforms include Ramp, Concur, Rydoo, and Zoho Expense. Some systems integrate directly with accounting software like QuickBooks or NetSuite to keep financial records aligned.

Time-saving features often include mobile receipt scanning, automatic categorization based on merchant codes, mileage tracking, and multi-currency conversion. Integrations can also help eliminate duplicate entry and keep books accurate.

Should you use a template or expense software?

If you submit only a few reports a year, a spreadsheet template may be enough. You’ll still need to attach receipts manually and double-check totals, but it works for simple needs.

As your team grows, templates become harder to manage. Managers spend more time chasing receipts, finance teams re-enter data, and policy violations are easier to miss.

That’s when expense management software becomes a better fit. Automated receipt capture, real-time policy checks, and direct accounting integrations save time for employees and finance while improving control over spending.

Common expense report mistakes to avoid

Even experienced employees make these mistakes, but you can prevent them with a little extra attention.

• Missing or illegible receipts: Faded receipts or lost documentation are common rejection reasons. Photograph each receipt immediately and save digital copies so they remain readable.
• Incorrect expense categorization: Putting meals under travel or supplies under equipment creates confusion for finance and skews reporting. When in doubt, check your expense policy or ask your finance team which expense category applies.
• Including personal expenses: Mixing personal and business charges happens easily, especially when using the same credit card. Review your report before submitting, and if you catch a personal expense later, notify your manager and arrange reimbursement.
• Missing submission deadlines: Late reports disrupt forecasting and may push your reimbursement into the next period. Set a reminder and make reporting part of your regular routine.
• Incomplete information or descriptions: Vague notes like “business meal” don’t provide enough context for approvers. Include who attended, what was discussed, and how the expense supported work.
• Mathematical errors: Incorrect subtotals or mismatched receipt amounts undermine confidence in your report. Use spreadsheet formulas or software to calculate totals and verify them before submitting.
• Policy violations: Exceeding spending limits, staying at unapproved hotels, or purchasing restricted items will get your report sent back. Review your travel and expense policy before a trip, and request pre-approval if you expect to exceed a limit.

Use Ramp to automate expense reporting

Managing expenses efficiently can be a challenge, and Ramp is here to help. Our platform automates receipt capture, streamlines reporting, and integrates seamlessly with your existing accounting systems.

Explore how our expense management solution can enhance your finance operations and support your business’s growth.

Request a demo to see Ramp in action.