[AP] AP - Meals & Entertainment Expense guide

Silvertrek Systems Meals & Entertainment Expense guide

This procedure is intended to support compliance with the Internal Revenue Service (IRS) regulations and Internal Revenue Code (IRC).

IRS regulations require receipts for all expenses of $75 or more. 

Each receipt should clearly include the date, place of business and amount including any delivery fees, taxes, and tips.

The purchaser is also required to provide detail of all persons in attendance as well as the business purpose and any business relationships. A complete, clear, and concise business purpose must be documented for each trip to validate the need for meals and entertainment.

Things to consider:

• Who was present during the meal or entertainment event? If anyone was present other than the businesses employees, document the person’s relationship and title.
• What is the purpose of the expense?
• Where did the expense take place? If there are multiple locations, list each location and the dates in attendance at each location.
• When was the expense incurred? Provide the dates for the overall expense and breakdown of any dates associated with multiple events.
• How did the expense benefit the company?

What GL expense code to use, Meals & Ent 50% GL 600(0) or Meals & Ent 100% GL 800(0)

Meals expenses that are 100% deductible will be coded to GL 800(0):

• Recreational expenses primarily for employees, such as the business holiday party or the company picnic
• Meal expenses (or goods, services, and facilities) made available to the public, usually for advertising and promotional purposes

Meals expenses that are 50% deductible will be coded to GL 600(0):

• A meal with a client where work is discussed (that isn’t lavish)
• Employee meals at a conference, above and beyond the ticket price
• Employee meals while traveling (here’s how the IRS defines “travel”)
• Treating a few employees to a meal (but if it’s at least half of all employees, it’s 100 percent deductible)
• Food for a board meeting
• Dinner provided for employees working late