In this article
Spending made smarter
Easy-to-use cards, spend limits, approval flows, vendor payments —plus an average savings of 5%.1
|
4.8 Rating 4.8 rating
Error Message
No personal credit checks or founder guarantee.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Webinar: Smart ERP setups to automate expense management
Dec. 13, 1 PM EST/10 AM PST

Incidental expenses are minor costs incurred in the course of business travel or other activities. Also known as incidental costs or "incidentals," these expenses aren't part of the primary objective of the activity or trip, but rather arise incidentally from the main business at hand. Thus, they're additional costs, rather than budgeted expenses like plane tickets or hotel rooms.


In this article, we'll break down what qualifies as an incidental expense, the tax implications of these costs, and how to manage them properly. We'll also outline best practices for tracking and budgeting for incidentals to set your business up for success.

What are examples of incidental expenses?

Incidental expenses can show up in many different contexts. Although circumstances vary, below are some common examples in the realm of business travel.

  • Tips for hotel staff

Travel is an area where incidental costs are often encountered. Although your hotel room might be a planned expense built into your budget, the money you give the hotel porters and housekeepers as a tip would be incidental.

  • Restaurant server tips

Similarly, your restaurant meals might be part of the business trip budget, but the tips you leave for the servers are incidental expenses.

  • Transportation extras

Parking fees, tolls, and driver tips are considered incidental expenses even though your rental car or driver reservation is typically budgeted for on a trip.

  • Wi-Fi costs

Your hotel may charge for the use of high-speed internet, which would be another incidental cost.

  • Printing and photocopying

Sometimes you need to pay to print, photocopy, or make large posters for a presentation during a trip. These costs might also qualify as incidental expenses.

Other incidental expenses might include fees to repair office equipment, last-minute decor for a company event, or unforeseen fines. Taxes aren't typically considered incidentals, as they're a budgeted and planned expense in your business finances.

Are incidental expenses tax deductible?

Incidental expenses can be tax deductible, but the specifics depend on factors like your local tax laws and the types of costs involved. In general, here are some helpful guidelines to bear in mind when assessing the tax implications of incidentals:

  • A company can usually deduct incidental expenses that are directly related to normal business operations—business trip tips to hotel staff, office supplies, printing, etc.
  • Keeping accurate, descriptive, and up-to-date records of such incidental expenses is essential to provide support for these deductions and protect your company in the event of an audit. Always collect relevant documents like receipts and bills with details about the location, time, and the goods or services involved.
  • There's a federal per diem rate that covers incidentals. The amount varies depending on where and when business is being conducted—usually about a couple of hundred dollars.

How should businesses manage incidental expenses?

Properly managing incidental expenses is an important way to make sure you have an up-to-date picture of your financial situation. You can manage your incidentals by taking the following steps.

Establish a budget

Create a budget that accounts for incidentals by reviewing your company's historical financial records. Look over the data to determine past incidental expenses and any recurring patterns. This will help you establish the usual incidental sources and how much money goes toward them. Try to separate incidental expenses into categories to allocate the correct portions of your budget to these areas.

Create an emergency fund

Incidental expenses tend to be small, but they can add up, especially if they aren't anticipated. Occasionally, there might be higher-cost incidentals as well. Creating an emergency fund with designated money for incidentals can provide some reassurance in the event of unexpected costs.

Set up processes

Set up specific procedures for incidental expenses. These might include a process for managers to approve incidental spending claims and authorize reimbursement. Establish requirements like receipts or other documentation, spending limits, and multiple channels of approval in certain instances.

Communicate expectations

Establish company rules that dictate what counts as an incidental expense and what to do about these costs. Communicate to employees the process for tracking incidentals, which documents to submit, and how to get reimbursements.

Keep the system and budget up to date

Monitor your expenses closely. Adjust your budget and how much is set aside for incidental expenses based on past spending and future projections. Update company policies around incidentals to maximize savings and efficiency as needed as well. Nothing in business financing is set in stone, and you'll likely find room for improvement in certain areas. 

Automate your expense tracking

Keeping track of any company expenses, including incidental expenses, can be a huge hassle for you and your employees. Consider implementing software or other accounting systems that allow you to automate the tedious and time-consuming parts of expense tracking.

How can you track incidentals with Ramp?

Tracking financial transactions like incidental expenses requires time and effort, but good budgeting software can automate many tedious aspects of the process.


Ramp's expense management system lets you streamline your procedure for tracking incidentals, curbing unnecessary spending and effectively budgeting for these costs.


Our cards have tools for setting spending limits, reporting expenses, and categorizing charges—which means you'll have accurate data about incidental expenses to establish your budget.


Ramp also automates the expense receipt and reimbursement process, freeing up countless hours for your finance team.


Learn more about how Ramp can automate your expense tracking and help you budget more effectively.

Finance Writer and Editor, Ramp

Ali Mercieca is a Finance Writer and Content Editor at Ramp. Prior to Ramp, she worked with Robinhood on the editorial strategy for their financial literacy articles and with Nearside, an online banking platform, overseeing their banking and finance blog. Ali holds a B.A. in Psychology and Philosophy from York University and can be found writing about editorial content strategy and SEO on her Substack.

Ramp is dedicated to helping businesses of all sizes make informed decisions. We adhere to strict editorial guidelines to ensure that our content meets and maintains our high standards.

FAQs

""
""
""
""
""
""

How Alexandra Lozano Immigration Law prepared for scale with Ramp

"I used to have to call our card provider and sit on the phone for a couple hours a week, I don’t have to do that with Ramp.”
Wayne Robinson, CFO, Alexandra Lozano Immigration Law

How Ramp helped Smart City Apartment Locating save time, expedite month close, and grow sustainably

"Five to 15 hours each month of non-value-add activities are off my plate. I’m able to be a strategic advisor versus just a tactical manager when it comes to spend management.”
Dustin Walsted, VP Finance, Smart City Apartment Locating

How TaskHuman built their runway with Ramp

“I’ve pretty much seen or used everything that’s out there, everything does something Ramp does, but nothing does everything Ramp does.”
Matthew Ferguson, Controller, TaskHuman

How First Tee transformed its bookkeeping and saved time with PwC and Ramp

"The efficiency of using PwC Bookkeeping Connect, coupled with the Ramp platform, has probably been about 75% time savings. Instead of every hour I would have had to spend on bookkeeping, I’m probably having to spend maybe 10 or 15 minutes.”
Dan Burke, CEO, First Tee San Francisco

How Mix Talent cut costs, gained transparency, and improved efficiency with Ramp

"I use Ramp’s functionality to examine the contracts and understand whether we’re getting the best terms, as opposed to just trying to get the bill paid. Ramp has allowed us to project cash flow so much better."
Paul Streitenberger, Accounting & Finance Lead, Mix Talent

How The Joffrey Ballet cut their month-end close time with Ramp

“One of the things I was looking for, and which Ramp has done for me beautifully, is to consolidate credit cards, ACH payments, check payments, and reimbursements into one place and give us a full picture for insights."
Gee Hoon Lim, Director of Finance, The Joffrey Ballet

How Beyond sped up reconciliation time 8x faster with Ramp

“With Ramp we close in 5-6 days, which is pretty quick for a company with four different subsidiaries."
Jake Steele, Senior Staff Accountant, Beyond