What is an expense report?

If your employees frequently make purchases on behalf of your business, you need a way to handle expense reimbursement. Even if your employees use corporate cards or preapproved stipends, you need to track these expenses to better understand your business spending.

That's where expense reporting comes in.

What is an expense report?

An expense report is an itemized document listing the business expenses an employee incurs on behalf of a company within a given reporting period. Employees submit it to request reimbursement and to create the paper trail you need for tax deductions and audits. Those expenses may be paid for with an employee's own money, a corporate card, or another source of company funding.

Most businesses require employees to submit expense reports on a weekly, monthly, or quarterly basis. For employees who incur business expenses more sporadically, expense reports are more likely to be a one-off occurrence whenever necessary.

What are expense reports used for?

Expense reports allow companies to review the expenditures employees incur on their behalf, verify that they're accurate and in line with their expense policy, and reimburse team members for these purchases as necessary. They also provide the necessary documentation for claiming business tax deductions, which is essential in the event of an audit.

What are expense categories?

Expense reports help you monitor budgets and manage out-of-pocket expenses. They also allow you to track business spending across different expense categories.

Expense categories provide a structured way to organize your costs into broader buckets. Use them to keep an eye on trends and make more informed spending decisions.

Typical expense categories might include:

• Employee benefits and training
• General and administrative (G&A)
• Rent and leases
• Marketing and advertising
• Travel expenses
• Software
• Maintenance and repairs

Here's a quick look at some of the most common categories and what falls under each:

Who prepares an expense report?

Employees are responsible for filling out expense reports and submitting them for approval. They collect expense receipts and document each purchase to provide a detailed account for reimbursement. Employees then submit their reports to their manager or the finance team for approval, ensuring compliance with the company's expense policies and budget constraints.

What's included in an expense report?

There's no one "right" way of organizing the information in an expense report. What's important is ensuring your expense reports contain all the essential information.

In addition to the submitter's information (the name, contact information, and department of the employee submitting the report), an expense report should also include the following information about each purchase or expense:

Key components of an expense report:

• Purchase cost: How much did each purchase cost, including any taxes and fees?
• Purchase date: When was the expense incurred? This should match the date on the receipt submitted as part of the expense report.
• Purchase description: What was purchased, and what was the business purpose of the expense?
• Expense category: What business expense category does each purchase fall under?
• Seller: Who was the retailer, vendor, or supplier associated with each purchase?
• Account: Which account should the expense be charged to? The account can be tied to a department, client, project, event, etc.
• Subtotal by category: What was the total cost in each expense category?
• Grand total: How much was spent in total over the course of the reporting period (day, week, month, etc.)?

Again, employees must submit receipts or other documentation for each purchase included in their expense reports. This is especially important if you plan to write off deductible expenses on your tax returns: the IRS generally recommends keeping these records for at least 3 years from the date you file your return, though many companies retain them for up to 7 years to be safe in the event of an audit.

What does an expense report look like?

A finished expense report is a simple table: one row per purchase, then subtotals by category and a grand total. Here's a sample expense report for an employee who traveled to a client kickoff in March.

• Subtotals: Travel $412.00, Meals $340.00, Lodging $268.00
• Grand total: $1,020.00

Take the middle line. The $340.00 client dinner on March 12 covers every component from the list above: purchase cost, purchase date, seller, purchase description and business purpose, and expense category. The receipt is attached, the line rolls into the Meals subtotal, the subtotals roll into the grand total, and the employee's manager signs off before finance processes the reimbursement.

Your own report should also carry the submitter's name, department, and the account each expense is charged to. To build one without starting from a blank spreadsheet, download Ramp's free expense report template for Google Sheets and Microsoft Excel.

What expenses go into an expense report?

An expense report can include any legitimate business expense. There are three types of expenses:

• One-time: Things you can account for, but occur infrequently, like travel expenses for business trips, event costs, or relocation expenditures
• Recurring: Ongoing and regular costs, like rent, utilities, or salaries
• Long-term: Expenses you are planning for in the future, like maintenance, repairs, or end-of-year bonuses

Regardless of the type, any expenses need to be accounted for on an expense report. Here are some specific examples:

• Travel expenses, like airfare, car rentals, or hotel costs
• Client lunches or dinners
• Office supplies
• Printing costs
• Professional memberships
• Conference fees
• Software subscriptions
• Telecommunications
• Insurance
• Training and continuing education
• Marketing and advertising campaigns
• Other miscellaneous expenses

Types of expense reports

Beyond categorizing individual expenses, you may also use different types of expense reports depending on the situation.

Travel expense reports consolidate all trip-related costs—airfare, lodging, meals, ground transport—into a single report. They're the most common type for employees who travel for work and make it easier to review total trip costs at a glance.

Mileage expense reports track personal vehicle use for business purposes. Employees log their miles driven and calculate reimbursement based on the IRS standard mileage rate, which changes annually.

Income and expense reports combine revenue and spending data to show a fuller financial picture. Freelancers, contractors, and project-based teams often use these to track profitability alongside costs.

The expense reporting process

Expense reporting is the term used to describe the overall process of filling out an expense report and submitting it for approval.

The expense reporting process is relatively consistent from business to business, even within different industries. The exact steps and the people involved may vary depending on a company's policy, but typically you would follow a process like this:

1. Incur an expense: You must first make a purchase on behalf of the business. Be sure to attach receipts or documentation related to the expense.
2. Prepare an expense report: At the end of the reporting period, you generate an expense report according to the process outlined in the business's expense policy
3. Submit the report: Once you've completed your report, submit for review. As part of the submission process, you must include any receipts or documentation related to the purchases.
4. The report is reviewed: After you submit the expense report, it's reviewed for accuracy, typically by your manager. The manager ensures the purchases comply with company policy, and that each expense is valid and associated with the right account.
5. The report is approved or rejected: If your manager approves the report, they forward it to the finance department, where it's officially processed and recorded. If the report is rejected, it typically gets returned to resolve any errors or discrepancies.
6. Reimbursement: If necessary, the finance department will initiate your reimbursement, typically via check or direct deposit (ACH)

Using an expense report template

To make things easier for your team, you may want to create an expense report template. Different templates serve different purposes. For example, you may request different information for one-time, quarterly, or departmental expense reports. So it's important to make sure you're using the right one that fits your needs.

If your business doesn't have a template for expense reports, you can download Ramp's free, easy-to-use expense report template, a ready-made expense report sheet for both Google Sheets and Microsoft Excel.

Of course, manually creating expense reports can quickly become tedious. That's why many businesses use expense reporting software to automate the process instead. These expense management platforms can track employee spending and automatically generate reports at the end of the reporting period.

How to fill out an expense report

Creating expense reports doesn't have to be hard, but it's a lot easier once you know the steps involved. For the full walkthrough, see our guide on how to make an expense report. Follow these steps for creating an expense report:

1. Itemize your expenses

First and foremost, within your template, you need to itemize your expenses by splitting out each purchase line by line. As noted above, this should include a description of the item, the cost, the date of purchase, the name of the retailer, and a brief description of the business purpose. Depending on the template you chose, you might group purchases into expense categories (business travel, supplies, etc.), too.

2. Provide receipts

You must submit supporting documentation for each purchase included in your expense report. Depending on your company's expense policy, these can be paper receipts, digital scans, or electronic receipts. In the absence of a receipt, your company may reject the report or require another proof of purchase, such as an invoice, canceled check, or credit card statement.

3. Total the cost

Before submitting the report, calculate the total of all your itemized expenses. If the template you're using breaks out costs into different categories—which many do—you'll first sum the subtotal for each expense category. And then, you add all the subtotals to find the total amount for your expense report.

4. Submit the report

Finally, submit the report and route it for approval to receive reimbursement. Depending on your company policy, you may be expected to either print the report and provide it to your manager, email the report to the person responsible for approvals, or else submit the report via expense management software. If you're unsure of the specific process for submitting your expense report, you should review your company's expense policy.

Are expense reports necessary?

Even if, as a small business owner, you are the only one making purchases on behalf of your company, it's still important to have an expense reporting process. Expense reports are necessary for a few important reasons:

Budgeting and planning

A properly submitted expense report includes important information about each expense. Having insight into this information makes it easier to plan and budget for future expenses, identify areas to potentially cut back on spending, and simply stay organized and manage your cash flow.

Reimbursements

If your employees make business purchases with their own money, the fair thing to do is reimburse them for those expenses. In fact, reimbursements might even be required by law. Under the Fair Labor Standards Act (FLSA), employers must reimburse employee business expenses if those expenses drop the employee's pay below the federal minimum wage.

Additionally, several states, and even some municipalities, have laws requiring reimbursement under a variety of circumstances. Employee expense reports make it easier to track expenses and ensure that you reimburse them according to the letter of the law.

Tax preparation

If you plan on deducting business expenses come tax time, it's important to have a clear record of all your expenses. This includes knowing which expenses are deductible and which are non-deductible. It also includes collecting and organizing documentation (i.e., receipts) for each purchase in the event that the IRS ever audits your business. Expense reports fulfill all of these requirements.

5 common expense report mistakes to avoid

Expense reporting is important for your business, so work to avoid these common mistakes:

1. Not having a clear expense policy

A clear and comprehensive expense policy can have a big impact on the number of errors you see submitted in expense reports. Educating your team upfront on what is and isn't reimbursable eliminates time wasted updating reports and fixing mistakes.

Your expense policy should explain who is allowed to make business purchases and what spending limits or expense category restrictions exist. It should also outline the approval process, indicate the documentation that must be submitted with each expense, define your expense reimbursement policy, and provide a template or form for employees to follow.

2. Accepting expense reports without supporting documentation

If you accept an expense report without a receipt or similar documentation, you open your business up to significant risk. This is especially true if you plan to claim tax deductions on business expenses. If your business is audited by the IRS and you don't have documentation to support each expense, you could face hefty fines and penalties.

3. Miscategorizing expenses

To get a clear sense of how your business is spending money, you need to accurately categorize your expenses. Doing so gives you a more granular understanding of spending and makes real-time reporting much easier. It also makes it easier to claim any deductions come tax season. With this in mind, it's important to review each expense to ensure that it's properly categorized before you approve it.

4. Late submissions

The longer employees wait to submit their expense reports, the harder it becomes to reconcile transactions and close your books on time. Stale expenses also increase the risk of lost receipts and forgotten details, which leads to inaccurate reports. Set clear submission deadlines—such as within a week of the purchase or immediately after a business trip—and enforce them consistently.

5. Submitting personal expenses

Mixing personal and business expenses on the same report is a compliance risk that can snowball quickly. Even if it's an honest mistake, personal charges on a business expense report can trigger audit flags and erode trust between employees and the finance team. Make sure your expense policy clearly defines what qualifies as a business expense, and review reports carefully before approving them.

Best practices for company expense reports

A solid expense reporting process doesn't just happen—it takes intentional planning from both employees and finance teams. These tips can help you avoid headaches and keep things running smoothly:

Create a clear expense policy

Your expense policy is the foundation of the entire process. Define what's reimbursable, set spending limits by category, and spell out the documentation requirements. The more specific you are upfront, the fewer back-and-forth corrections you'll deal with later.

Submit reports promptly

Encourage employees to submit expense reports as soon as possible after a purchase or trip. Weekly or end-of-trip deadlines work well for most teams. The sooner reports come in, the easier it is to reconcile transactions and keep your books current.

Use digital receipts

Paper receipts fade, get lost, and are tedious to organize. Digital receipts—whether scanned, photographed, or emailed—are easier to store, search, and attach to expense reports. They also make audits far less painful.

Automate expense tracking

Manual data entry is one of the biggest bottlenecks in expense reporting. Expense management software can capture receipts automatically, categorize spending, and flag policy violations before a report is even submitted.

Tools like Ramp handle this for you. Finance teams that automate review reclaim 4–5 hours per week that used to go to manual expense checks. Once automated review is running, only 10–15% of transactions need your judgment, so you spend your time on real exceptions instead of every line item.

How Ramp eliminates expense reports

Ramp's expense management software doesn't make expense reports easier to fill out. It makes them unnecessary. Every card transaction is captured, coded, and reviewed automatically, so nobody assembles a report after the fact.

AI-powered receipt matching pairs each transaction with its receipt for you. Employees snap a photo and submit it by web, mobile app, email, or text, and Ramp extracts the key details and matches them to the right transaction from your Ramp cards.

Policy Agent, an always-on AI reviewer trained on your real expense policy, reviews 100% of transactions and routes only genuine exceptions to a human. It catches 7x more out-of-policy spend than rule-based systems at 99%+ accuracy, and it enforces your policy before spend happens instead of flagging it afterward. Set granular controls for international travel or restricted merchant categories, and out-of-policy purchases get blocked at swipe.

When it's time to post to the GL, accounting integrations sync expense data to QuickBooks, Xero, Sage Intacct, and more. Map it to your chart of accounts once, and a continuous real-time sync keeps your books audit-ready.

Unlimited physical and virtual cards mean your team rarely pays out of pocket, so reimbursements all but disappear. Save an average of 5% a year across all spending with Ramp.

See how Ramp works →