On a day-to-day basis you are likely to incur some out of pocket expenses such as parking charges, business mileage, train fares, stationery and so on.
These costs can be claimed back from the limited company.
The best way to deal with these is to use the company credit or debit card; that way the cost will automatically be picked up by the company and there will be nothing further for you to do except to file the receipt or invoice.
Where it is not possible to use the company debit or credit card for out of pocket expenses then you need to have an Expenses Recording System in place.
On a regular basis e.g. at the end of a month, you would complete an expense claim with a list of these expenses paid from your own funds that need refunding from the company bank.
Once the expenses claim has been submitted you would make a payment from the company bank account to yourself with the reference “Expenses” for the same amount as the total on your monthly expense form.
No expenses should be included on the expense claim form which have been paid from the company bank account; if you do this it would mean that you would be claiming the same expense twice.
You should have the same sort of proof to back up the claim as an employer would expect which would meet the demands of HMRC should they ask; all expenses should have a supporting receipt and the mileage claim should have a supporting “mileage log”.
A mileage log is a list of your business journeys in your own car showing the date, destination, mileage and reason for the trip.
Your Expenses Recording System doesn’t have to be anything grand. There are a couple of very simple options to consider …
Much like expenses forms you may have used when working for someone else, you can complete an expenses form and submit this to your employer; the limited company. If you are using an accountant, they should be able to provide a template for your expenses claim form.
There’s an app for everything these days including recording your out of pocket expenses. As well as posting the expenses many apps allow you to capture a copy of the receipt or invoice to back up the expense claimed. So all of the administration can be done and kept in one place for peace of mind.