Travel expenses are all the payments in your business that are related to travelling.
Examples of travel expenses include hotel accommodation, plane tickets, taxis, and meals the individual has while travelling. The cost of commuting to and from work does not count as a travel expense.
As long as you have receipts, you can get tax deductions on most of your business expenses.
Covering travel expenses for employees
Often, the employee pays for the expenses during the trip and gets reimbursed afterwards, but it’s also possible for you as the employer to cover the expenses, for example, by providing the employee with a company card.
However, the most common way to cover travel expenses is through reimbursement. Reimbursement means that the employee gets reimbursed for the actual expenses they have, so long as they have kept receipts for all purchases.
Other solutions
An employee can also receive a per diem based on rates, in other words a set sum of money per day that’s meant to cover meals. This per diem must be reported together with salary when you do payroll.
It’s also possible for the hotel accommodation, flight, train or bus fees to be invoiced directly to the company, if you have an agreement with a travel company. It might be a good idea to set up this kind of agreement if your business has a lot of employees that need to travel, or some employees travelling a lot, for example to get to client meetings, workshops, seminars or similar.
What travel expenses should be covered?
What kind of travel expenses that are covered is determined between the employer and the employee, however it’s common for hotel accommodation, transportation, and meals to be covered. If the trip lasts a long time, it’s also normal to include a salary supplement, bonus, or similar to compensate for time spent on the trip.
It’s very important that the employee has receipts to verify the transactions.