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Expense Reimbursement

Employees who spend money on behalf of your organisation are often reimbursed through payroll or as a separate payment. There are several ways to do this. Note that we are referring to Reimbursement, so it is assumed these Reimbursements aren't taxable for the purposes of this help note which provides general, educational information only.

Will cover some optional methods for capturing reimbursements in Saasu

Enter as a Purchase

Bulk-enter Expenses in a Single Purchase Transaction

Enter a purchase using the Employee as the Contact with each line item in the Purchase representing the individual expense items (use the description field to add detail regarding who the Contact is for, the expenses, the date of the expense, etc). When you make the Reimbursement Payment to the employee you can apply this to the Purchase accordingly. Attach receipts and claim forms to the Purchase transaction as scanned documents. The negative side to this approach is that you lose supplier Contact tracking because the Contact on the Purchase is the person you are reimbursing. This method isn't great when you want to track other information about the expense. For example, an asset purchase or other expenses that have more complex tax, asset and/or inventory implications.

Capture each Expense Individually as a Purchase

Enter each expense as a separate Purchase that you want to track against suppliers. When it is time to reimburse the person using an online banking transfer payment, check, or alternative method, you apply a payment to all those outstanding purchases at once. As an example, you may apply $1000 to a dozen different purchases. This creates just one payment on the Bank Reconciliation, which makes it easy.

Track Expense in a Spreadsheet or other Expense Tracking System

This might be useful if you track expenses on your mobile or in a spreadsheet. When you are ready to reimburse them, create the Purchase and apply the Payment in Saasu. Then attach the spreadsheet and/or a reference to expense tracking systems records. You could also enter the payment as a General Journal. You would be crediting your Bank Account and debiting an Expense Account. It's fast but lacks detail. This may not be suitable in some zones where your local tax authority requires a more thorough approach. The catch with this approach is that you have two systems to maintain on an ongoing basis to ensure good accounting records.

Enter the Expense(s) as a Pay Item in Payroll

With this method you need to mark the payment as Nontaxable if it's a clear-cut nontaxable payment for Reimbursement. If in doubt, speak to your advisor. For example, you could use the pay item Wage and Salary: Expenses Reimbursement. A General Journal could be used to itemise this item in your accounts because it would be posted as one bulk amount in the Payroll transaction. Create a separate payroll for just the reimbursement otherwise SGC may be calculated to include this.

Some employers adopt an approach of paying business-related expenses to staff through their payroll transactions. Before adopting this approach, please refer to your adviser regarding the suitability of payments to employees where tax isn't being withheld from payments on business-related expenses.

The following example is a Paytransaction where the employee gets paid for business-related expenses in their pay that the employer has decided aren't taxable. In Saasu, you can create your own pay items, set these if they are taxable, and decide whether to exclude them from other pay items that rely on calculations for tax, pensions, or superannuation.

Note: Depending on your accountant's advice, you may prefer to run the Expenses-Related pay item as a Wages and Salaries pay item.

  1. Set up a pay item for the expenses by selecting Settings > Payroll > Manage Pay Items.
  2. Click the Wages and Salaries link to load and create the pay item.
  3. Set up the employee's default pay to include the expenses. Note that the tax setting is turned off because in this example these are business-related expenses where you are advised by your accountant not to withhold tax on this portion of the pay. Additionally, when you set up the pay item above you may have set it to nontaxableby default.

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