What expense category do hotels come under?

When your team stays at hotels during business trips, where do these expenses fit in your company's financial records? Knowing how to classify hotel expenses helps keep your accounting organized and your finances on track.

Classifying hotel expenses

Hotel costs usually fall under the travel expense category in your accounting system. This category groups together costs like flights, car rentals, and accommodations, making it easier to track total travel spending. Depending on your company's policies, hotel expenses might also be classified as:

• Accommodation expenses: Focusing specifically on lodging costs.
• Operating expenses: If the hotel stay is part of normal business operations.
• Business entertainment: When hosting clients or events at the hotel.
• Employee benefits: For incentive trips or retreats provided to staff.

Consider the purpose of the hotel stay and your internal policies when choosing the right category.

Examples of hotel expenses

Understanding how hotel expenses can vary assists in classifying them correctly. Here are some examples of hotel expenses:

• Conference attendance: Staying at a hotel while attending or hosting a conference.
• Client meetings: Booking a hotel room for out-of-town client meetings.
• Employee training: Accommodation costs when staff travel for training sessions.
• Company retreats: Lodging expenses for team-building events or incentive trips.
• Long-term projects: Extended stays for employees working on projects away from home.

For instance, if your sales team stays at a hotel for a week-long training session, this expense could be categorized under employee training within the travel or operating expenses.

Tax implications of hotel expenses

Properly categorizing hotel expenses ensures compliance and can maximize deductions during tax time. Key considerations include:

• Deductible expenses: Hotel costs for business purposes are generally tax-deductible. Remember to keep detailed receipts and records to support your expenses.
• Business vs. personal: Ensure expenses are strictly for business purposes; personal stays aren't deductible.
• Per diem rates: Be aware of IRS per diem rates for lodging if applicable.

Report hotel expenses in the appropriate category on your tax filings. Consult with a tax professional to understand specific rules and how they apply to your business.

Let Ramp automate your expense process

Managing hotel expenses doesn't have to be a hassle. Ramp can automate the categorization, tracking, and management of all your travel expenses—including hotels. With Ramp, you get real-time insights and seamless integration with your accounting system, making expense management easier and more efficient.