An important aspect of running a business is measuring and controlling expenses. According to the Harvard Business Review, “most administrative departments (particularly those with more than 20 employees) use as much as 20% of their budgets to supervise and coordinate their own activities.”

This means that each section is autonomous and has its resources to develop and keep working. But they also owe accountability to owners, shareholders, or CEOs based on their spending.

And the only way to do that is to have a monthly expense report form. This document also has taxable usability that will help brands reduce the total amount of taxes they must pay at the end of the month.

If you want to learn more about the expense report and how to use and create it, this article is for you.

It will disclose everything related to the report and where you can create one in 9 steps.

Business 101 - What Are Business Expenses

A business expense is a fixed cost a business must pay to maintain its processes running. Both small businesses and corporations track expenses to know what they are spending and use them for tax deductions later in a yearly expense report.

Keep in mind that only some business expenses incurred can count as tax deductions. But still, you should track all of them and subtract them from your income statement.

What Is an Expense Report

It is a document that businesses create to track expenses and the monthly or yearly spending of the company. They include all the expenses necessary to run a business, including gas, meals, hotels, or travel expenses.

You can claim tax deductions according to the expense category when you use track expense reports to control your company’s money.

As such, the expense report helps you to:

1. Control spending.

2. Reduce the total amount of tax paid during a year.

3. It helps with budgeting.

Business spending is a company factor that you must control if you want to have a thriving firm.

But to do that, you must classify your consumption into expense categories.

Expense Category

There are different expense categories when you are tracking expenses. For example, travel-related expenses. 

The idea of the expense report is that you give as much detail about them for tax purposes to get a reimbursement amount after submitting expenses.

Below you can see some deductible expenses you can include in your reports:

• Bank fees and interest.
• Office rents.
• Utilities.
• Car and health insurance.
• Employees payroll.
• Employee education and retirement plans.
• Accounting software – or any program – used in your company.
• Company vehicle and furniture.
• Professional affiliations.
• Travel and meals.
• Repair and maintenance.

Now, if you are a small business owner working from home, you can also add many business expenses to your report. Some of these small business-related expenses are:

• Home office supplies.
• Mortgage interest.
• Security software.
• Property taxes.
• Home insurance.

More things could incur business expenses. As long as they take part of your business, you can use them to make partial or full tax deductions. Check with your accountant or accounting system to learn more!

How Businesses Use an Expense Report

Businesses must generate expense reports to know exactly how much it costs to run their business. This way, a CEO can know precisely how much economic resources are used for a project or a department.

Employees within a company can create expense reports to have reimbursements for any expense related to the company they’re working for. 

To do that, an employee must have receipts for a particular expense category and submit them to the company so the expense reimbursement can proceed.

There are types of expense reports that a business should consider – monthly and yearly.

Monthly Expense Reports

The monthly expense report controls monthly spending and measures if the company is sticking to a budget.

It also helps to cut down spending and improve profits – a common strategy during an economic crisis.

Yearly Expense Reports

The yearly expense report is mostly made to find tax-deductible expenses. When you come up with a report like this, tax returns are also easier, along with any audits you need to do.

How Often Should You Develop a Business Expense Report?

Businesses need to submit expense reports as often as necessary. Since the report is a form of internal and external spending control, you can use it to measure fixed costs and improve variable costs.

Small businesses tend to release three reports:

• Monthly.
• Quarterly.
• Yearly.

They have finite resources. And as such, they must control any prior advances paid and track business spending wisely.

What Expense Reporting Should Include

Report expenses don’t have a singular format that you should follow. However, they do have key information that you should add to use when the tax time comes.

As such, here’s what you should include when you create a document to report expenses:

• Date: Specify when you purchased the item.
• Vendor: Describe from whom you got the item.
• Client: Write to the person from whom the item was purchased.
• Project: Write for which project you’re going to use the item.
• Author: Express who got the item.
• Notes: Any extra information like sole proprietors, business purpose, if you purchased the item with your own money.
• Amount: Item’s total cost, including tax and tax category.

You have to do this with all the purchases you make. You can use an expense report template if you have never reported this or itemized products. We will talk about this below.

Programs You Can Use To Create Business Expense Reports

You need specific programs to develop your expense report properly, especially because you must select different expense categories and add them to your document to discriminate them.

Some of the programs you can use are:

Microsoft Excel

Microsoft Excel is spreadsheet software that you can use to create expense reports on your own or use expense report templates to create a great document. In this software, you can build multiple reports and business documents you may need, such as:

• Tax forms.
• Bank account details.
• Specific expense reports.
• Reimbursed amount report.
• A brief description of a product line document.
• Business general finances.
• Monthly benefits reports with grand total included.
• Accounting profit and taxable profit reports.

Excel helps you determine your minimum and maximum expenditure and records everything you type. So, if you create an expense report, ensure you include even the most recent expense.

Use accurate functions, macros, and create graphs or charts for your business.

Learn to manage your documents online, send them to your team, customize each dollar in real-time and prepare to deliver them with the proper terminology – such as Truck Expenses Commissions or Advertising Car.

How To Get Excel For Small Business Expense Reports

If you don’t have Microsoft Excel to save your expense reports or want to update your current edition, here’s how you can get Excel.

1. You can go to the official Microsoft website and find the 2021 edition or purchase Microsoft 365 subscription. This method will cost you over $250 for the original serial code or monthly fees.

2. You can go to a third-party seller like RoyalCDKeys, where you can get Microsoft Office 2021 CD Keys for less than $15.

The advantage of getting a serial key from third-party sellers is that you don’t have to spend a fortune.

You only need to activate it during or after your Office installation to get your software for a lifetime. 

Zoho Expense

Zoho is a spreadsheet program similar to Excel. The Expense edition helps you automate expenses in your monthly or yearly reports. You’ll also get to prepare expense reimbursement documents and more.

This program can also be used for annual employee submitting and card reconciliation.

You’ll get to add each item with its dollar amount and also set up limits or ground rules for your expenditures.

This edition could be great for companies to control their budgeting, but Excel is a complete software.

Expense Point

It is an expense report management solution that you can use to automate each of your employees' report processes. Every business – both big and small companies – can use it to report submitting, creating, policy enforcement, and more.

You can share your documents with your team and give your workers flexibility when creating their reports.

And if you ever need to see it online away from the office, you can download an Android/iOS app for your devices.

It’s not a free option.

Google Sheets

If you’re looking for free solutions, Google Sheets could be your best option.

This cloud-based program can help you develop reports, databases, and spreadsheets for data visualization without any issues.

You can create expense report templates, share them and make your employees make copies so they can work independently with complete autonomy. You can also develop yours and ask for real-time help in case you need it.

Overall, Google Sheets is an Excel-light version. You can use it to solve issues online, but Microsoft is better if you want more functionalities.

Other Expense Report Software

If those aren’t enough for you, you can still find other options, such as:

• Precoro.
• Procurify.
• Quickbooks Online.
• Freshbook.

How To Create an Expense Report In Excel

Excel has most functionalities and facilities that other software doesn’t. That’s why we recommend you create your expense reports in this program.

But, if you don’t know how to do it, here’s a tutorial to create an expense report using applicable and simple steps in Excel.

1. Open Excel and create a new document.

2. Access the View Tab and uncheck the Gridlines.

3. With the blank canvas, start adding information. Include title, purpose, employee name – if it’s an employee submitting report – ID, period.

4. Add a format, columns, and describe each expense. For example, airfare supplies, hotels, floods, phone bills, etc.

5. Select your whole table and click the Insert tab to create a Table.

6. Go to the Table Design tab.

7. Uncheck the Filter button and mark Total Row.

8. Give format to your cells to type data correctly. Press “Ctrl + 1” and set up the formats to the columns, including date, time, etc.

9. Start adding information and simple formulas to automate your report.

After completing these steps, your template will be generated to create expense reports without delays.

Expense Report Form Templates You Could Use

If you can’t create an Excel template from scratch or you want to improve the one you have, you can use Excel.

This software already has hundreds of templates available on its website for you to try. You only need to enter Office Templates, download the one you like, and open it with Excel.

There are different models, but in general, they will typically include:

• Spending category.
• Type of expense.
• Contact details.
• Date range.
• Employer.
• Purchase receipt.
• Client(s).
• Proof of the money spent.

Expense Report - Summary

Creating an expense report can help you know – and understand the money you’re spending on your business.

When you measure your expenses and transactions, you can realize where you can cut down expenses or where you are wasting too much money.

This document will also help you save capital thanks to tax deductions and the reimbursements you could get when you declare assets or consumables you use to run your company.

Excel makes it easy and possible to create a complete and useful expense report that you can use for yourself and your employees as an essential tool for budgeting and correctly deducting taxes.