How do I enter expenses that are paid by an employee and refunded by the business?
Here is a question we received in one of the discussions:
Can you please advise how to code expenses expenses that are paid
by an employee and refunded by the company.
For example; Employee A spends £100 on Mobile phone, £200 on travel, and £50 on meals. A total amount of £350 is paid to the employee as expense reimbersement at the end of the month. But the single payment to the employee can only be accrued against a single expense type.
What is the best way to manage this to ensure that the figures are accurately recorded against the correct expense type?
Here is what I do.
I create a petty cash account named with the employee name to use
as their expense account. When they put in their expenses, enter
the information using their petty cash account and set the other
account as one of your expense accounts depending on what the
expense was. You might like to keep track of motor separately from
hotels etc.
This will give you a negative balance on the employees expense account, which is the amount you owe them back. To settle their expense account at the end of the month, just enter a transaction between your main cheque account and their expense account (the petty cash account). This should reduce the cheque account balance and move the petty cash account balance back to zero if you pay back the full amount.