How does disbursement work?

What are expenses?

A disbursement means that private money has paid something on behalf of the company.

Expenses come in two forms - personal expenses and employee expenses. The difference between them lies in their purpose and how they are recorded.

Expenses can range from a trip to a bakery for Friday coffee to major trips and trade shows. How they are accounted for and reimbursed varies even more.

Please note that the rules on VAT deduction vary between the different types of expenditure. For example, for some own expenses, the company can deduct VAT even though it did not pay the bill.

What is an expense?

Out-of-pocket expenses mean that an employee pays for company expenses with private money. An example would be if an employee pays for a computer that will only be used in the office.

The own expenses can be made by anyone working in the company, provided they can show a receipt for what has been purchased. The group also includes partners who are not employees.

Something worth pointing out is that own outlays and own withdrawals are not the same thing. Out-of-pocket expenses are expenses that are paid for with private money and reimbursed by the company. Own withdrawals are profits taken out of the company.

What are employee expenses?

When employees spend money, there are two forms of compensation to give. One is a direct payment and the other comes in conjunction with salary in the form of a per diem or expense reimbursement.

The compensation paid directly is the same as the above-mentioned personal expense.

Mileage or other travel allowances are two examples of per diems. They increase the cost of living for the employee because of the work. The reimbursement for the expenses then comes as a supplement to the salary, up to a certain limit.

Instead, an expense reimbursement can be, for example, a telephone bill, which is used both for business and private purposes.

Record expenses? We have a better proposal

There are many ways to handle this type of expenditure, and few of them are particularly smooth. Physical receipts or statements should be submitted and recorded, the type of expense should be listed, and then the reimbursement should come right.

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The benefits are many, but the ease of use is one of our favourites. All you have to do is take a photo of the receipt and we'll take care of the bookkeeping.

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