Recognition in the books of business travel costs and other settlements with employees
In addition to the remuneration for work due to employees employed in the company, there are also other non-wage employee benefits. In this article, we will discuss one of them, namely receivables for business trips. And the basis for its settlement - the recognition of business travel costs in the accounting books! We invite you to read!
Business trip - definition
A business trip is also called a business trip. Pursuant to Art. 775 paragraph. 1 of the Labor Code, an employee is on a business trip when he performs a business task at the employer's request outside the place where the employer is located or outside the permanent place of work.
Performing an official task is not tantamount to performing work. An employee assigned by the employer to undertake a business trip has a permanent place of work in a given locality, while he is temporarily staying in the place of performing the official task. In order to determine whether we are dealing with a business trip, it must therefore be determined whether the employee performs his / her work duties outside the place where the employer is based or outside the permanent place of work. If a given employee performs work under the contract permanently outside the place of residence specified in the contract, or on dates and places which he decides on his own in accordance with the contract, such activities do not meet the definition of a business trip included in the Labor Code. Therefore, it is very important from the point of view of classifying trips as business trips, precisely defining the place of work when drawing up an employment contract.
Posting an employee on a business trip is made on the basis of a business trip order and may be ordered by the employer, a person representing the employer or the immediate supervisor, provided that he or she has the appropriate authorizations.
The departure order should contain the following data:
- name and surname of the employee,
- purpose of the business trip,
- the place where the delegation begins and ends,
- name of the destination town,
- duration of a business trip,
- mean of transport.
Training and conferences - can they be considered a business trip?
The employer may treat various types of training and conferences attended by the employee as a business trip, but is not obliged to do so. In practice, this means that, in accordance with the internal regulations of the company, the employer may charge for costs such as travel, accommodation and meals for the employee, but it depends on the company's policy.
Principles of carrying out and accounting for business trips
An employee who is on a business trip is entitled to receivables to cover the costs associated with it. The issues of conditions for such trips are defined in the Regulation of the Minister of Labor and Social Policy of 29 January 2013 on receivables due to an employee employed in a state or local government budgetary unit for a business trip. This regulation also applies to a business trip of an employee employed by an employer other than the above-mentioned, provided that in a collective labor agreement, work regulations, remuneration regulations or an employment contract (if the employer is not covered by a collective labor agreement or is not obliged to establish regulations remuneration), no different rules for carrying out and accounting for business trips have been defined. However, it should be borne in mind that these provisions may not set the daily allowance for a business trip within the country and abroad in an amount lower than that contained in the above-mentioned regulation.
In the regulation on business travel receivables, we can find the amount and conditions for determining the amounts due to an employee for a business trip within the country and abroad, in particular the amount of allowances, taking into account the duration of the trip, and in the case of travel outside the country - the currency, in which the diet and the limit for accommodation in individual countries will be determined, as well as the conditions for reimbursement of costs of travel, accommodation and other expenses.
Diets, lump sums, reimbursements, i.e. what amounts should the posted person receive?
Diets are obligatory for an employee who is on a business trip. Their amount depends on the length of such a business trip and whether it is a domestic or foreign trip, and if it is a foreign trip, also on the country of the delegation.
The rates of national allowances are described in detail in the article: National allowances - lump sums for domestic travel - 2021
An employee who is on a business trip is also entitled to reimbursement of costs for:
- journeys from the place of work or the place of residence of the employee to the place constituting the purpose of the business trip and back;
- an overnight stay or an overnight lump sum;
- commuting by local transport;
- other documented expenses.
Documentation of a business trip
Business travel expenses should be settled within 14 days from the end of the delegation. After returning for a business trip, an employee should prepare a cost statement containing the amount of per diems and lump sums as well as the costs of travel and other documented expenses. They are returned to the employer together with source evidence documenting the costs related to the delegation, i.e. invoices, bills, tickets, confirmation of parking fees, highway tolls and other necessary expenses directly related to a given business trip. It may happen that the employee does not have the appropriate documents confirming incurring the cost of the business trip, in such a situation he should complete and provide the employer with a written statement about the expense and the reasons for not documenting it. The travel expense statement is approved by the employer or another person authorized by him.
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Recognition of business travel expenses in the books of account
The basis for settling the costs related to a business trip are documents confirming the fact that the employee has incurred certain expenses. It is important to ensure that the costs of a business trip are properly documented, which is the basis for making appropriate accounting entries, i.e. recognizing settlements with employees and charging operating costs.
Business travel expenses may be booked on the "Other expenses by type" account or a separate account for business trips "Business travel expenses" may be created in the chart of accounts. The corresponding account may be the "Other settlements with employees" account.
Ms Aneta employed under an employment contract at Link sp.z o.o. who is an active VAT taxpayer, received an order to go on a business trip to another city (national delegation) in order to negotiate the terms with a business partner. The delegation lasted one day, and Ms. Aneta, 8 days after the end of the trip, provided the employer with a travel bill together with an invoice for the hotel (PLN 246 gross) and for a return trip by rail (PLN 108 gross). Link sp.z o.o.did not define specific rules for the settlement of business trips, and therefore the amount of per diems and other charges is determined on the basis of the regulation on business travel receivables. Before leaving, Ms. Aneta received an advance payment of PLN 300, the remaining amount was returned to the employee upon presentation of the travel cost bill. We book the following operations:
1. Payment of an advance from the cash desk of an employee delegated to a business trip: PLN 300
PLN 300 Debit account 234 "Other settlements with employees"
PLN 300 Has an account 101 "Cash register"
2. Settlement of hotel accommodation costs: PLN 246
PLN 246 Wn account 406 "Business travel expenses"
PLN 246 Has an account 234 "Other settlements with employees"
Note: VAT for hotel services is not deductible.
3. Settlement of the purchase of train tickets: PLN 108
PLN 100 Wn account 406 "Business travel costs"
PLN 8 Debit account 223 "VAT input"
PLN 108 Has an account 234 "Other settlements with employees"
4. Settlement of the diet
PLN 30 Wn account 406 "Business travel expenses"
PLN 30 Has an account 234 "Other settlements with employees"
Note: For the settlement of a business trip in accordance with the ordinance on business travel receivables, a diet of PLN 30 (one day) was adopted.
5. Additional payment for the advance payment 384 PLN - 300 PLN = 84 PLN
PLN 84 Debit account 234 "Other settlements with employees"
PLN 84 Has an account of 101 "Cash"
From a tax point of view, in the event of a possible inspection, the entrepreneur must demonstrate the direct or indirect impact of the delegation on obtaining income from business activity. Only then may the expenses related to the business trip constitute tax deductible costs. Expenses incurred on employee business trips constitute operating costs of the unit.