How standard expense report forms
work against you.
Everyone uses the traditional and very tedious expense report. First, sort all your expenses by date. Find the box on the form that matches the category of the expense and the date, and write the amount in the box.
You’re chasing information all over the form. Entertainment amounts go in one area while their details go in another; you must cross-reference dates and amounts, creating opportunities for idiotic errors. Mileage and automobile expenses are in separate areas, and “miscellaneous” expenses make it even more fun.
All of these special requirements make it easy for confusion and mistakes to occur for the persons submitting the forms, their managers, and for those approving them for payment.
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There’s plenty of pain to go around. Except for the IRS auditors. You’ve made it easy for them.
When they show up for an audit, they know they’ll find comfort in finding that old familiar form, the expense report. The IRS is used to looking at the “standard” forms: dates down the side, expense categories across the top. Because everyone uses the same date-by-category matrix, they’ve seen thousands of them and feel very comfortable reading them. They also know how to sniff out the tricksters.
“Hmm, there’s an expense on a Saturday in the Entertainment column; I wonder if that dinner receipt is legitimate?” |
Of course, we want to do what we can to support the IRS if we’re chosen for an audit, because we want them out of our hair as soon as possible! But given how few businesses are audited annually (I’m betting mine will be next after I put this in print!), using a form just because it will make an IRS audit easy is ludicrous.
Instead, use a form that anybody on your staff can easily understand, readily complete with accuracy, and submit on a timely basis – without having to cajole and threaten them for months after the fact (which may jeopardize the report’s validity).
Besides, timely reports are more accurate -- we all know how our memory fades with time -- and after a few weeks, it’s more likely that someone will fabricate names when filling in an entertainment expense than looking up the real names that can be documented at audit time. In the end, your expense reporting will be more accurate and fairer to everybody, including the IRS!
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