Between the growing power and speed of the internet, the steady move to online clouds for information storage and distribution, and the increasing number of jobs people can perform with just a computer, more and more people are telecommuting from home. You do lose something when you can’t talk to your coworkers face-to-face, but text, voice, and video chat all help and having workers stay at home lets companies save money on office space.
However, there are some questions that come up when employees spend most of their days outside of the home office: does it count as a business trip in terms of filing expense reports and getting compensation? What about the times employees go to the main office, especially if they live out of town? After all, business trip expenses apply to employees the company sends to other cities as long-term representatives. So why not someone who works from home in a different city?
The simple answer is that, at least in Canada, companies can compensate employees for business trips at their discretion. You’ll need to spell out the expenses you cover in the employee contract and handbook, but it’s up to you whether you’ll pay any of the expenses that come from working remotely.
On the other hand, there is a tricky aspect to the question: are food, entertainment, and lodging expenses deductible when telecommuting employees file their expense reports?
Lodging expenses are straight out since the employee is staying in a permanent residence, and entertainment is out in most cases for the same reason. Still, entertainment expenses could apply in cases when they’re directly related to the job: wining and dining a vendor, for instance, or taking a potential client out for a round of golf.
However, thanks to the way the law reads, it’s possible to cover the cost of lunch eaten during the workers’ telecommuting shift and filed on expense reports. Many companies allow this because the cost of that lunch would come from the employee’s wages or salary (and therefore the company’s budget) either way, so by handling it this way they get a 50 percent deductible.
Whether you decide to pay any expenses that come with working at home or whether you only cover a midday meal, letting employees telecommute is a good way to save money on office jobs. Expense reports can be a big part of these savings, but be careful you don’t take things too far.