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How to correctly account for travel expenses

by , 26 September 2013
Whether you're the company charging for travel time, or you're the company receiving invoices that include travel expenses from a consultant, you'll need to account for this effectively. Let's have a look at how to account for travel reimbursements effectively.

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How to account for travel expense reimbursements from your client

John is a consultant for Consultants International. He has a range of clients he travels to.  

Consultants International invoices clients for all expenses (flights, mileage, food, misc expenses). The client reimburses them fully.

This is how Consultants International accounts for travel expense reimbursement:

1. It shows the full invoice amount (i.e. inc. expenses reimbursed) as sales.
2. It shows the related 'expenses' as cost of sales.

Keep reading to find out how to account for these expenses from your consultant…

Don't do another Vat transaction until you've read this

I thought I was claiming every possible input tax credit, but… I didn't know I could claim back input tax on my short-term insurance premiums… it saved me R8 070 last year.

I also didn't know I could claim Vat on domestic air tickets… it saved me R67 257!

By using these two simple Vat tips, I saved my company R75 327 last year.

How to account for travel expenses from your consultant

Bernie is the bookkeeper for Platinum International. He hired John to give him expert advice.

Bernie shows the full cost of Johns invoice as 'consultancy' expenditure.

Now you know how to account for these expenses correctly. Look out for more travel accounting tips in upcoming bulletins.

Until next time,
Philip Rosenberg

Product Manager, Practical Accountancy Loose Leaf

PS Do you have an urgent travel accounting question? Ask finance professionals at no cost on the Accounting and Tax Club at no extra cost


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