Startup expense reimbursement policy: a template

1. Purpose and scope

This policy covers how [Company name] pays for and repays business expenses. It applies to [all employees] [employees in [states]], wherever they work. It is meant to be an accountable plan under IRS rules, so reimbursements under it are not wages unless it says so.

2. Ask before you spend

Ask [your manager] before you buy anything this policy doesn’t approve automatically, and before any recurring or annual charge. An approval covers only the amount approved.

Note: In Illinois an employer generally owes only expenses it authorized or required, unless it failed to follow its own written policy.

3. Software and AI tools

3.1 Software and AI subscriptions you need for work are repaid up to [$X] a month each, with the business purpose. Anything recurring above that, and any annual plan, needs [your manager’s] approval before the first charge.

3.2 Check [the software list] first, in case the company already pays for the tool.

3.3 Company code, customer data and confidential documents stay out of personal accounts, and so do company logins, unless the tool has passed [a security review by [title]].

3.4 A tool moves to a company account once [3] people use it or it holds company or customer data; then cancel your personal plan.

3.5 For a subscription you also use personally, the company repays the business share.

3.6 [Finance] reviews every subscription’s owner, seats and renewal date [quarterly] and cancels what isn’t used.

Note: The receipt should show the vendor, plan, billing period and seats. Paying the personal share is taxable pay.

4. Equipment and home office

4.1 Equipment for your work, such as a monitor or chair, is repaid up to [$X] an item without approval; above that, [IT] approves it first [and orders computers].

4.2 Equipment the company buys or repays is company property, listed by [IT], and returned within [X] days of leaving, at the company’s cost.

Note: Under the IRS de minimis safe harbor, a company without an applicable financial statement can elect yearly to deduct equipment up to $2,500 per invoice, or per item as substantiated by the invoice ($5,000 with one), if its books expense such items under procedures set at the start of the year.

Note: Check state law before deducting unreturned equipment from final pay. California’s wage order allows it for non-exempt staff only with their prior written authorization, and never for normal wear and tear.

5. Internet and phone

For home internet and your phone, the company pays: [choose one]

• [Option A: a stipend of $[X] a month, paid through payroll as taxable wages.]
• [Option B: the business share of each bill, [[X]%] [up to $[X] a month], repaid against the bill.]

Note: For a phone the job requires, IRS examiners may accept a repayment reasonably calculated not to exceed the actual cost as not wages. In California, staff required to use their own phone for work are owed a reasonable percentage of the bill either way.

6. Travel and conferences

6.1 [Your manager] approves each trip and its budget before you book; every expense on it, from flights to rides, is filed to that trip.

6.2 Book economy [, premium economy on flights over [5] hours], [14] days ahead when you can. Hotels are repaid up to [$[X] a night including tax] [the federal lodging rate for the city]; submit the itemized bill.

6.3 Your meals while traveling overnight are repaid up to [$[X] a day]. Conference registration needs approval before you register.

Note: GSA’s lodging rates exclude taxes; say whether your cap does.

7. Team events and offsites

[Title] plans team events and offsites with a budget approved in advance, up to $[X] a person [; alcohol [not repaid] [up to $[X] a person]], coded apart from customer meals.

Note: Federal tax law treats social events primarily for employees differently from business meals.

8. Meals with customers

A customer meal needs a business purpose, someone from [Company name] there and each attendee’s name and company; it is repaid up to $[X] a person with tax and tip.

Note: Business meals are generally 50% deductible, and only if not lavish and someone from the company is there.

9. Mileage

Business driving in your own car is repaid at [the IRS business standard mileage rate in effect on the date of the drive] [[X] cents a mile], plus parking and tolls. Commuting isn’t repaid.

Note: The 2026 IRS rate is 72.5 cents a mile through June 30 and 76 cents from July 1; anything above it is taxable wages.

10. Receipts

Submit an itemized receipt or clear photo, with the business purpose, for every hotel stay and every expense of $[X] or more; for a lost one, note the amount, date, merchant and purpose.

Note: The IRS requires a receipt for lodging and any other travel expense of $75 or more; Illinois requires a signed statement for a missing one.

11. Deadlines

Submit expenses within [30] days; claims over 60 days old [are paid as taxable wages] [need approval from [title]]. Return any advance or overpayment within [120] days of the expense.

Note: IRS rules treat 60 days to account and 120 days to return any excess as reasonable; Illinois allows 30 days to submit unless the policy allows more.

12. Approval

Claims within this policy are approved automatically; anything outside it needs approval from [your manager] [[title]]. No one approves their own spending.

13. When reimbursement is paid

Approved claims are paid [by direct deposit] within [X] days of approval, never later than 30 days after you submit them.

Note: Iowa and New Hampshire set a 30-day limit.

14. What isn’t reimbursed

Commuting, personal use, upgrades for comfort, fines, travel for family or friends, [alcohol outside sections 7 and 8] and [other items].

Note: Illinois lets an employer refuse a claim that didn’t follow its written expense policy; California’s section 2802 has no such exception.

15. Records

[Finance] keeps receipts, approvals and the equipment list for [X] years.

Note: The IRS generally asks for three years from filing the return, and at least four for employment tax records.

16. State and local law

Where a state or local law gives employees more, such as reimbursement of all necessary expenses or a shorter payment deadline, that law applies. [List your states and cities.]

Note: In California, an agreement to waive reimbursement is void.