Key takeaways
- Small businesses need an expense policy too. One page covering eligible costs, limits, receipts and deadlines is enough.
- Many teams set a receipt threshold of $25 or $75. The IRS requires receipts for all lodging and for other travel costs of $75 or more under Publication 463.
- Clear submission deadlines help keep reimbursements tax-free under accountable plan timing rules.
- A policy only works if it’s easy to follow, so pair it with a simple way to capture receipts.
What is an expense policy?
An expense policy turns “use your judgment” into clear rules. It answers the questions employees ask before they spend: Can I book this hotel? Is a client lunch OK? Do I need a receipt for a $9 taxi? And it answers the owner’s questions afterward: Is this reimbursable? Is it a valid business expense?
Enterprise policies can run 30 pages. A team of fewer than 50 people needs something much shorter that everyone actually reads. Aim for one page.
Keep every receipt and claim in line with your expense policy using the Manage Receipt app.
What to include
Who the policy covers and which costs: travel, meals, mileage, supplies, software.
Nightly hotel cap, meal limits or per diem, class of travel.
When a receipt is needed and what it must show.
Which costs need sign-off before spending.
How and when to submit, and how fast you repay.
Fines, personal items, upgrades, alcohol (unless allowed).
Sample clauses
Adapt these to your business. They’re written for a team of under 50 people with no dedicated finance staff.
1. Purpose
We reimburse reasonable, necessary costs you pay personally while doing your job. Spend company money as if it were your own.
2. Receipts
Scan a receipt for every expense of $25 or more, and for every hotel stay regardless of amount. Meal and hotel receipts must be itemized. Add the business purpose and, for meals, the names of attendees.
3. Travel and lodging
Book economy airfare at least 7 days ahead where possible. Hotels up to $200 per night, or the GSA rate for the city if higher. Personal extras on the hotel bill are not reimbursed.
4. Meals
While traveling, meals are covered up to $68 per day. Client meals need a business purpose and the client’s name.
5. Mileage
Business driving in your own car is reimbursed at the current IRS standard mileage rate. Log the date, destination, purpose and miles. Commuting isn’t reimbursed.
6. Submission and payment
Submit expenses within 30 days. Return any unspent advance within 30 days of the trip. Approved expenses are paid with the next payroll.
7. Not reimbursed
Fines, personal entertainment, family travel, upgrades, and any expense without a receipt above $25 unless approved by the owner.
Receipt thresholds
| Threshold | Pros | Cons |
|---|---|---|
| Every expense | Complete records; simplest rule | More admin for tiny costs |
| $25 and up | Good balance for small teams | Needs a log for small items |
| $75 and up | Matches the IRS line for travel, gifts and vehicle costs | Less visibility into small spending |
With a receipt app, capturing every receipt costs seconds, so many small teams simply require all of them.
How to enforce it
- Make it easy to comply. A phone scanner that captures receipts on the spot does more than any reminder email.
- Check every report against the policy before approving, not just the total.
- Be consistent. Exceptions for one person become the rule for everyone.
- Explain rejections with the clause number, so people learn the rule.
- Review the policy yearly, especially limits tied to GSA rates and the IRS mileage rate, which change.
A written policy that requires receipts, sets deadlines and asks for excess advances back also forms the backbone of an accountable plan, which keeps reimbursements tax-free.
Common policy mistakes
- Too vague. “Reasonable meals” leads to arguments; “up to $68 per day while traveling” doesn’t.
- Too long. A 20-page policy that nobody reads is worse than one page everybody follows.
- No deadline. Without one, receipts arrive months late, if at all, and reimbursements can lose their tax-free status.
- Outdated rates. Mileage and per diem figures change every year.
- Exceptions without rules. Decide who can approve exceptions and write it down.
Make the policy easy to follow
The hardest clause to enforce is “keep your receipts.” With Manage Receipt, your team scans receipts the moment they pay, adds the business purpose and sorts expenses into the categories your policy uses. Reports arrive complete, so approving them is quick and consistent.
Explore AI Expense ReportsFrequently asked questions
Does a small business need an expense policy?
Yes, once anyone other than the owner spends business money. A one-page policy covering eligible costs, limits, receipts and deadlines prevents disputes and speeds up approvals. It also helps you meet IRS accountable plan rules, which keep employee reimbursements tax-free.
What receipt threshold should we set?
Many small teams choose $25 or $75. The $75 line matches IRS rules for travel, gift and vehicle expenses, but lodging always needs a receipt. If your team uses a receipt app, requiring every receipt is simple and gives you the cleanest records.
What should an expense policy include?
Include who and what it covers, spending limits, receipt rules, pre-approval requirements, how and when to submit, how fast you reimburse, and a list of expenses you never pay for. Keep it short and specific, with examples, so employees can follow it without asking.
How often should an expense policy be updated?
Review it at least once a year. The IRS mileage rate changes every January and GSA per diem rates every October, so limits tied to them need updating. Also review it when you add new expense types, such as remote work equipment or software subscriptions.