If you’ve ever tried to track down a crumpled receipt or wondered whether that home office chair counts as a reimbursable expense, you’re not alone. What used to be a simple policy for business travel has now expanded. New trends are shaping the business world, and the workforce is adapting to remote employment, hybrid schedules, and a maze of IRS rules.
Tracking reimbursements isn’t exactly the most exciting part of running a business. But failing to rethink your processes can lead to compliance headaches, financial penalties, and even employee dissatisfaction.
According to the Global Business Travel Association, nearly 1 in 5 expense reports contains errors, costing companies an average of $52 to correct each one. Meanwhile, class action lawsuits related to labor and employment increased by more than 20% between 2020 and 2023 (Source). The cost of getting it wrong isn’t just financial—it’s operational and reputational, too.
If your company still relies on manual spreadsheets or loosely defined policies, it’s time for a fresh look. LBMC Employment Partners helps growing businesses design reimbursement systems that reduce risk, stay compliant, and support the employee experience.
What’s New in 2025: 4 Trends in Expense Reimbursements
Expense reimbursement practices have evolved rapidly in the past five years. Here are four major trends shaping the way companies need to think about reimbursements:
Remote Work Reimbursements are the New Normal
States like California, Illinois, and Massachusetts require employers to reimburse employees for necessary remote work expenses, such as internet access, phone usage, or home office equipment. Even in states without these laws, employees increasingly expect some form of stipend or reimbursement. Companies must build policies that account for various state laws and create consistency across their teams.
IRS Guidance Is Tightening
Recent IRS updates to accountable plan rules are increasing scrutiny on employer reimbursement practices. Employers must ensure all expenses are properly substantiated, timely submitted, and clearly separated from taxable compensation. Failing to follow these rules can result in penalties, additional tax liability, and even reclassification of reimbursements as income.
Equity and Inclusion in Expense Policies
Employees in different locations or roles may have access to different reimbursement opportunities. Companies are being called to design expense policies that are both compliant and fair, so that lower-paid or remote employees aren’t bearing hidden costs just to do their jobs.
Oversight Still Matters
Expense management platforms have made it easier to capture and process expenses in real time. But even with automation, the need for human oversight remains critical. A tech platform can process a receipt, but it can’t advise on multi-state compliance, help write equitable policies, or manage IRS audit prep.
Best Practices for Smarter Expense Reimbursement Management
So what does a smarter, future-ready approach look like? Here are five ways to modernize your reimbursement strategy:
Create Comprehensive, Future-Ready Policies
Let’s say your marketing manager buys a new webcam for client Zoom calls. Is that reimbursable? If your policy isn’t clear—or if your system for submitting expenses is clunky—you risk delays, confusion, or even non-compliance.
It’s essential for companies to have clear, detailed policies that cover different types of expenses (travel, equipment, remote work), outline submission timelines, and explain what documentation is required. These policies should live in your employee handbook and be reviewed annually.
Digitize and Centralize Documentation
Make it easy for employees to submit receipts and documentation through an integrated platform or mobile app. The less friction there is, the more compliant your team will be. Digital documentation also makes it easier for your HR or finance team to access what they need during audits or reviews.
Separate Reimbursements from Payroll
Avoid adding reimbursements directly to payroll without using the proper codes. Doing so may inadvertently classify reimbursements as income and subject them to payroll taxes. A proper system, backed by knowledgeable payroll professionals, can ensure reimbursements are processed accurately and compliantly.
Audit Regularly, Not Reactively
Set up a cadence to regularly review submitted expenses. Routine HR audits help detect fraud, identify gaps in documentation, and offer insight into spend trends. They also ensure you’re staying compliant with IRS and state-specific laws.
Design With the Employee Experience in Mind
A clunky or slow reimbursement process can frustrate employees, especially those who rely on timely payouts. Build policies and systems that prioritize transparency, speed, and accessibility. Doing so sends a strong message that you value your team’s time and contributions.
Ready to Rethink Reimbursements?
At LBMC Employment Partners, we understand the challenges today’s employers face. Whether you’re navigating complex reimbursement rules, managing a multi-state team, or trying to reduce risk, we’re here to help.
Our consultative approach means we don’t just process reimbursements—we help you design policies, evaluate compliance risks, and integrate reimbursements into your larger payroll and HR strategy.
Unlike national providers with dashboard-only solutions, our team is made up of real people who offer real guidance when you need it. We believe HR is about relationships, and that’s what sets us apart.
If you’re ready to take a smarter approach to expense management, we’re ready to help. Contact LBMC Employment Partners today to learn how our payroll, PEO, and HRO services can support your business as you grow.
