Recording, VAT: how to manage expense claims in accounting?

Expense claims and accounting go hand in hand.

Indeed, managing business expenses is a strategic administrative and accounting task, involving the entry and recording of expenses incurred by employees and reimbursed by the employer, as well as tracking expenses.

Meticulous attention to detail is essential, especially as your business grows and expense management becomes more complex.

How do you record an expense claim in your accounts? Follow the guide!

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A reminder of the different reimbursement methods

The company records in its accounts the expenses advanced by its employees, which are then reimbursed to them.

Depending on the type of expense and the applicable conditions, the company can choose between :

• reimbursement of actual expenses, which requires invoices and supporting documents to be collected and entered into the accounts;
• payment of a lump-sum allowance, in which case the accounting department must be able to justify proven business expenses, for example via a management accounting extract proving that expenses have been charged to a specific project.

To ensure that reimbursements are exempt from social security charges, it must comply with the compensation ceilings imposed by the Urssaf and reviewed each year in specific scales.

In which journal should expense claims be entered?

There are several possibilities for entering expense claims in an accounting journal :

• either in the purchase journal, in most cases ;
• in the miscellaneous operations journal (OD), for small expenses;
• or in the bank journal for companies using cash accounting.

How do I record an expense claim?

Collecting receipts before recording expenses

Before recording business expenses, the accounting department must ensure that no supporting documents are missing, and then archive them carefully.

Why should this be done? Because, in the event of an Urssaf audit, the absence of supporting documents could raise suspicions of disguised benefits in kind, and call into question the company's entire accounting system.

In the event of loss, the employee should be asked to obtain a duplicate or to provide a sworn statement.

Expense accounts (debit)

In accounting terms, expense claims are recorded in class 6 accounts of the General Chart of Accounts.

Depending on the type of business expense, it is broken down into different expense accounts, the main ones being :

• Account 6251 for travel expenses, including fuel, reimbursement of train, plane and subway fares, cab fares, mileage and tolls;
• account 6256 for mission expenses such as hotel, meal and accommodation costs,
• account 6234 for gifts to customers,
• account 6257, known as "receptions", for the reimbursement of invitations to restaurants, cafés, etc.

There are also

• account 626 "Postage and telecommunications", including reimbursement of telephone bills,
• account 6063 "Maintenance products and small equipment" for reimbursement of small items,
• account 6064 "Administrative supplies" for office supplies.

By recording expenses scrupulously in the right account, it's easier for you to track and report on your most important expenses.

⚠️ If part of the expense is subject to social security contributions (if the compensation ceiling is exceeded), you should record :

• exempt business expenses in the relevant expense account,
• the amount subject to social security contributions in account 6441 "Miscellaneous allowances and benefits".

Credit accounts

To record expense claims, the counterparty account to be used on the credit side can be either :

• account 421 "Personnel - Remuneration due", when expenses are advanced by employees;
• account 425 "Personnel - Advances and payments on account", when expenses are advanced and a payment on account is made to the employee;
• or account 467 "Other accounts receivable or payable".

☝️ Keep meticulous track of each employee by creating subdivisions in these accounts.

To account for the manager's expenses, use the following accounts:

• account 108 "Manager's account",
• or account 4551 "Partner's current account".

What about accounts for VAT deductions?

VAT can be deducted from certain expenses:

• meal expenses,
• hotel expenses
• travel expenses,
• company gifts.

If this concerns you, you can book the expense claim by debiting :

• the expense account for the amount excluding VAT,
• and account 4456 for deductible VAT, for the VAT amount.

[Memo] 5 steps to book an expense report

Here's a summary of the steps involved:

1. collect receipts for actual expense reimbursements ;
2. enter the expense claim in the purchase journal;
3. debit expense accounts relating to the type of expense;
4. debit input VAT account, if applicable;
5. credit account 467, 421 or 425.

See all software Expense Management

Simplifying expense claims in accounting

To avoid data entry errors and oversights, you can also install an expense report management solution connected to your accounting software.

Each month, expenses are automatically categorized, deductible VAT identified, and expense and credit accounts pre-filled.

What's more, the application can make your work easier by alerting you when a receipt is missing. And it's all dematerialized, for simplified follow-up and less costly archiving!