"If a company pays an employee's personal expenses, how's it recorded?"
When the company pays for an employee's personal expenses, it needs to be recorded as a: "Benefit-in-kind"
To record a company paying for an employee's personal expenses as a "Benefit-in-kind":
- First, click: MenuExpense claim
- Select the person who the company's paying the personal expenses for.
- Next, click: Benefit-in-kind
- If you've got an image, like a receipt, that you'd like to include, you can upload, or take a photo of it.
- Then click: Next
- Type in the value of the personal expenses the company's paying.
- Next, change "Arranged by" to: "Employee"
- Optionally, if there's a co-pay, or a yearly amount that the person's agreed can be taken off their pay, enter that also in: Employee deducted co-pay
- Then click: Next
- Optionally, type in a short description about the personal expense, and click: Next
- And because it's a payroll admin who's entering it, the expense is automatically approved.
- Now, to see how it shows up on the person's paystub, scroll down and click: See on paystub
- And when you hover your mouse over the "Benefit-in-kind" amount, you'll see the details.
- There may have been a co-pay, or an amount that the person's agreed can be taken off their pay. If so, you'll also see that amount showing as "Employee deducted co-pay" with its own notes when you hover.
- And finally, you'll know that the personal expense's value is being correctly recorded and taxed.
Keep in mind that:
- The co-pay amount is automatically set to be deducted from the person's pay.
- The company doesn't have to separately collect the co-pay amount from the person.
- Also, in some cases, the employee has themselves paid for the personal expense cost, and is asking the company for a once-only reimbursement.
- To add a "Once only taxable benefit" reimbursement, click: MenuExpense claim, select the person, and click: Once only taxable benefit
- Also, if the personal expense payment is repeating every week, month, or every payday, set it up as a repeating: "Benefit-in-kind"
To learn more:
And that's it! That's everything you need to know about paying for an employee's personal expenses!