How to Make a Business Expense Report in 2025

Tracking expenses is crucial for financial management and planning. Whether you're a manager overseeing a department, an accountant, or an employee seeking reimbursement, knowing how to create expense reports accurately and thoroughly is an essential skill.

This guide will walk you through the process of making a business expense report, from understanding its purpose to implementing best practices that streamline the process.

A business expense report is a document that records and summarises expenses incurred by an employee or department on behalf of the company. It serves as a record of business expenditures and is used for various financial processes, including employee reimbursement, budget tracking, and tax preparation.

Expense reports typically include information such as the date of each expense, the vendor or payee, the amount spent, the category of expense, and a brief description of the purpose. They often also include attached receipts or other documentation to verify all the expenses.

Accurate expense reporting is vital for several reasons:

Employees who incur out-of-pocket expenses for business purposes rely on expense reports to get reimbursed correctly and promptly.

Expense reports provide valuable data that helps businesses track spending against budgets and make informed financial decisions.

Many business expenses are tax-deductible, and accurate expense reports are crucial for claiming these deductions correctly.

Well-documented expenses contribute to overall financial transparency, which is important for stakeholders, investors, and auditors.

Detailed expense reports, along with proper review processes, can help prevent and detect fraudulent activity.

Before we dive into the process of creating an expense report, it's important to understand its key components. A comprehensive expense report typically includes:

Header Information: This includes the employee's name, department, employee ID, and the date range covered by the report.

Expense Details: The main body of the report lists individual expenses, including:

Date of the expense

Vendor or payee

Amount spent

Expense category

Brief description or purpose of the expense

Totals: Subtotals for each expense category and a grand total for all expenses.

Receipts: Copies or images of receipts for each expense, typically required for amounts over a certain threshold (often $25 or $50).

Approval Section: A space for manager or supervisor approval.

Additional Notes: Any extra information or explanations for unusual expenses.

Having established the fundamentals, let us proceed with a detailed, step-by-step guide on creating a business expense report:

Step 1: Choose Your Expense Report Template

The first decision in creating an expense report is choosing the format you'll use. For small businesses or infrequent use, a spreadsheet template often suffices. However, as a company grows or deals with more frequent expense reporting, specialised software can save time and improve accuracy. There are several options:

Programs like Microsoft Excel or Google Sheets offer flexibility and are widely used for creating expense reports. Many companies provide pre-made templates for employees to use.

If your company uses accounting software like QuickBooks or Xero, it likely has built-in expense reporting features.

There are many software solutions designed specifically for expense management, such as Expensifyor SAP Concur.

Some larger organisations have their own proprietary systems for expense reporting.

Step 2: Set Up the Report Structure

Once you've chosen your format, it's time to set up the structure of your own expense report. If you're using a template or specialised software, much of this work may already be done for you. If you're starting from scratch, here's how to structure your report:

Create a header section for employee information and report details.

Set up columns for the following information:

Date

Vendor/Payee

Description

Amount

Category

Project or Client (if applicable)

Add rows for individual expenses.

Include a section at the bottom for subtotals by category and a grand total.

Add a space for notes or explanations.

Include an approval section for manager sign-off.

Step 3: Gather Your Expense Information

Before you start filling out the report, gather all the information you'll need:

Receipts for all expenses

Credit card statements

Mileage logs (if claiming mileage expenses)

Any relevant emails or documents explaining the business purpose of expenses

Having all this information at hand will make the process of filling out the report much smoother.

Step 4: Enter Your Expenses

Now it's time to start entering your expenses. Here are some tips for this step:

Enter expenses in chronological order, starting with the earliest date in your reporting period.

Be consistent with date formats. Use the same format (e.g., MM/DD/YYYY) throughout the report.

Provide clear, concise descriptions for each expense. Instead of just "Lunch," write something like "Lunch meeting with Client X to discuss a project proposal."

Assign each expense to the correct category. Common categories include:

Travel (airfare, lodging, car rental)

Meals and Entertainment

Office Supplies

Professional Development (conferences, training)

Mileage

Client-related expenses

If an expense is split between personal and business use, only enter the business portion.

For mileage expenses, enter the number of miles driven and the reimbursement rate (which should be set by your company based on IRS guidelines).

For expenses in foreign currencies, convert to your company's standard currency. Use the exchange rate from the date of the transaction and make a note of the conversion rate used.

Step 5: Attach Receipts

Most companies require receipts for expenses over a certain amount, typically $25 or $50. Even for smaller amounts, it's a good practice to keep and attach receipts whenever possible. Here's how to handle receipts:

For paper receipts:

Scan or take clear photos of each receipt.

Organise digital copies in the same order as the expenses in your report.

If submitting a physical report, tape receipts to a sheet of paper in chronological order.

For digital receipts (e.g., email confirmations):

Save them as PDFs or image files.

Name the files in a way that makes them easy to match with the corresponding expense entry.

If using expense management software, many apps allow you to photograph receipts on the go and automatically match them to expenses.

Make sure all required information is visible on the receipt, including the date, vendor, amount, and items purchased.

If a receipt is lost, check your company's policy on missing receipts. You may need to fill out a missing receipt form or provide a written explanation.

Step 6: Calculate Totals

After entering all your expenses, it's time to add them up:

Calculate subtotals for each expense category.

Sum up the grand total of all expenses.

If you received any cash advances, subtract this amount from your total to get the amount due for reimbursement.

Double-check all your calculations to ensure accuracy. Even small errors can cause delays in reimbursement or create accounting issues.

Step 7: Add Notes and Explanations

Before finalising your report, add any necessary notes or explanations:

Provide context for any unusual or high-cost expenses.

Explain any expenses that might not immediately appear to be business-related.

Note any expenses that were shared with other employees or split between personal and business use.

If you exceeded any company spending limits, provide an explanation and note any pre-approvals you received.

Clear communication in this step can prevent questions and speed up the approval process.

Step 8: Review for Accuracy and Compliance

Before submitting your report, conduct a thorough review:

Check that all expenses are legitimate business expenses according to your company's policy.

Verify that you've stayed within company spending limits for various expense categories.

Ensure all required receipts are attached and legible.

Double-check all calculations to make sure the totals are correct.

Verify that dates, vendors, and descriptions are accurate and clear.

Make sure you haven't accidentally included any personal expenses.

Taking the time for a careful review can prevent delays and the need for corrections later.

Step 9: Submit for Approval

The final step is to submit your completed expense report according to your company's process. This typically involves:

Signing the report (either physically or digitally).

Submitting the report to your manager or the accounting department.

Being prepared to answer any questions or provide additional information if requested.

Remember, the person approving your report may not have been present for the expenses incurred, so clarity and thorough documentation are key.

Expense reports can be used to analyse business expenses and gain insights into spending habits. By analysing expense reports, businesses can identify areas where they can cut costs, optimise their budget, and make informed financial decisions.

Some ways to use expense reports to analyse business expenses include:

Identifying trends and patterns in spending habits

Analysing expenses by category and department

Comparing actual expenses to budgeted expenses

Identifying areas where costs can be reduced or optimised

By using expense reports to analyse business expenses, businesses can gain a better understanding of their spending habits and make data-driven decisions to optimise their budget.

While most expenses are straightforward, some situations require special handling.

If your employees use their personal vehicles for business purposes, keep a detailed log of the business mileage. Record the date, destination, purpose of the trip, and number of miles driven. They will need to use your company's designated mileage rate for reimbursement calculations.

Some companies use per diem rates for meals and incidental expenses during travel. In these cases, you typically don't need to provide receipts for these expenses, but you should still record the dates and locations of your travel.

When creating an expense report, there are several common mistakes to avoid. These include:

Inaccurate or incomplete information

Failure to categorise expenses correctly

Not tracking expenses incurred

Not regularly reviewing and reconciling expense reports

Not implementing a standardised system for tracking expenses across the organisation

By avoiding these common mistakes, businesses can ensure that their expense reports are accurate, complete, and useful for making informed financial decisions.

If you're responsible for establishing an expense report policy for your organisation, consider including the following elements:

Clearly define what types of expenses can and cannot be claimed.

Set maximum amounts for various expense types, such as meals, hotels, or client entertainment.

Specify what receipts or proof is needed for different types and amounts of expenses.

Establish how often expense reports should be submitted (e.g., monthly, or within a week of returning from a business trip).

Outline who needs to sign off on expenses and at what levels additional approvals are required.

Explain how and when reimbursements will be made.

Describe how expense reports will be reviewed and verified.

Clearly state how non-compliance with the expense policy will be handled.

Address any unique situations relevant to your business, such as international travel or entertainment expenses.

If you're using specific expense management software, provide guidelines on how to use it correctly.

Creating and managing business expense reports is a critical task for financial control and planning. By following the steps and best practices outlined in this article, you can develop an effective expense reporting system that supports your business goals, ensures compliance, and provides valuable financial insights.

For businesses dealing with international expenses, modern financial platforms like Fyorin can help streamline the process by providing multi-currency expense management and automated reconciliation across global accounts. Whether you choose traditional expense management tools or integrated financial platforms, the key is maintaining clear documentation, consistent processes, and careful attention to detail. Get in touch to learn more.

How often should I submit expense reports?

It's recommended to submit expense reports on a monthly basis or after completing a business trip to avoid delays in reimbursement and to keep financial records up to date.

Why are monthly expense reports important for businesses?

Monthly expense reports help businesses track spending trends, stay within budget, and ensure accurate financial planning. They also support efficient tax preparation and compliance.

What's the benefit of using expense report templates for submitting expense reports?

Using expense report templates simplifies the process of submitting expense reports by ensuring all necessary details, such as dates, amounts, and categories, are captured systematically, reducing errors and speeding up approval.