An expense report documents the costs associated with doing business. These costs are deductible from earnings to determine profits and taxable income.
This page provides a free expense report template you may download along with helpful topics about creating an expense report and documenting transactions.
Sample blank expense report in Excel format (.xls) that may be customized. This form may be used to document expenses as a business owner or for employee reimbursement of expenses incurred while working.
Articles About Creating An Expense Report
Keeping Track of Your At-Home Business Expenses
by Jan K
Turn Personal Expenses Into Business Deductions
by Thomas Norton
What Can I Expense
The IRS definition of a business expense is
"Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit."
In order for a business expense to be deductible it must meet two qualifications.
1. The business expense must be an ordinary expense or common and generally accepted in the specified business.
2. Also, a deductible business expense must be necessary or helpful and appropriate to operate your business. Deductible business expenses must be separate from expenses used to figure the cost of goods sold, capital expenses and personal expenses.
How To Prove Your Business Expenses
You are not allowed to deduct business expenses that are approximated or estimated.
If you wish to deduct travel, entertainment, gift, or transportation business expenses there must be adequate documentation to prove or substantiate specific aspects of the business expense. Timely and accurate records will be needed to prove to the IRS if your tax return is ever audited that the business expense is indeed tax deductible. When proving your case to the IRS it is important to keep in mind that written records are much more reliable than oral statements used for evidence. Receipts, cancelled checks, and bills can all be used to support your case for legitimate business expenses.
What If I have Incomplete Expense Records
If you do not have the physical document to prove your expense such as a receipt or bill of sale then you must provide the following:
A written statement containing the details of the transaction.
Any additional evidence that supports the validity of your written statement. For example a statement from an eye witness that the transaction took place.
Personal vs. Business Expenses
Most of the time you are not allowed under the IRS tax code to deduct personal, living, and family expenses.
If you do have an expense that is split between personal and business use, you may divide the cost between the two and then deduct only the business portion of the expense.
If you have additional questions about creating an expense report sheet then visit the Small Business Ideas Forum for further help.