Corporate Cards for Associates: Policy Questions

When establishing and managing corporate cards for associates, it's essential to consider the financial implications and compliance requirements. One key aspect is determining the reimbursement rate for business use of the card. In most US states, businesses can surcharge credit card transactions up to their actual processing cost, not exceeding 3%. This means that the business can charge associates for the difference between the card's processing fee and the actual amount they use the card for. When setting the reimbursement rate, consider the associate's business use percentage, the card's annual fees, and any other expenses associated with the card. Additionally, ensure that all associates are aware of the reimbursement policy and understand their obligations. For the bigger picture, see our guide to expense management for law firms.

Financial and Compliance Aspects

Corporate Card Policy Guidelines for Associates

Establishing a corporate card policy for associates is essential to manage expenses and ensure compliance with tax laws and regulations. Here are some key financial and compliance aspects to consider:

• The IRS allows businesses to reimburse employees for expenses incurred while traveling in their personal capacity, provided the expense is reasonable and can be verified through documentation.
• The policy should outline the definition of personal and business expenses to ensure accurate reimbursement.
• The policy should also specify the types of expenses that are eligible for reimbursement, such as meals, lodging, transportation, and phone bills.
• A clear policy on expense reporting and approval processes should be established to prevent unauthorized expenses.
• The policy should include a threshold for reimbursement, such as $50, to prevent employees from claiming excessive expenses.
• A record-keeping system should be in place to track and store receipts, invoices, and other supporting documents.
• The policy should be reviewed and updated annually to ensure it remains compliant with changing tax laws and regulations.
• A formal approval process should be established for large or frequent expenses.
• The policy should be communicated to all employees and associates, and a clear understanding of the policy should be provided.

This means that the business can claim back a portion of the transaction amount, but the employee must still pay the full amount.

Common Policy Pitfalls and Best Practices

Some common policy pitfalls when establishing corporate card policies for associates include:

• Failing to clearly define what constitutes deductible expenses, leading to confusion and potential over-reimbursement.
• Not documenting all business-related expenses, making it difficult to track and pay for legitimate expenses.
• Not establishing a process for reimbursing employees for business-related expenses, leading to delayed or incorrect payments.
• Not ensuring that employees understand their responsibility to report all business-related expenses and follow the company's expense reporting procedures.
• Failing to regularly review and update the corporate card policy to ensure it remains compliant with changing regulations and industry standards.
• Not providing clear instructions on how to report and submit expense reports, leading to delays or missed payments.

To avoid these pitfalls, it is essential to establish a clear and comprehensive corporate card policy that outlines the acceptable deductible expenses, expense reporting procedures, and reimbursement process. Additionally, it is crucial to provide regular training and support to ensure employees understand their responsibilities and the policy.

For example, the policy might include:

• A list of deductible expenses that are approved for reimbursement
• A clear definition of what constitutes a business-related expense
• A step-by-step process for reporting and submitting expense reports
• A deadline for submitting expense reports
• A procedure for resolving disputes or issues related to expense reimbursement

Tax rules, limits and rates change. Confirm current figures with the IRS or your accountant before you file.

Corporate Card Policy Guidelines for Associates

A corporate card policy sets rules for employee use, establishes accountability, prevents misuse, and protects against overspending and fraud. This policy must be clearly communicated to all employees, including associates, and must be followed strictly.

To ensure compliance with IRS reimbursement rates and expense documentation requirements, it is essential to establish clear guidelines for corporate card use. Here are some key aspects to consider:

• A common practice is to charge 3% surcharge on credit card transactions, which is the maximum allowed under most US states' laws. However, this can vary depending on the state, so it is crucial to check the specific laws in your area.
• When using a corporate card, associates are expected to disclose the transaction at the point of sale and to obtain prior authorization before making any purchases.
• To prevent misuse, associates must not purchase personal items, such as alcohol, tobacco, or recreational entertainment, using their corporate card.
• Employees must only charge personal expenses, such as cash advances or gift cards, to their corporate card.
• Associates are responsible for reporting any discrepancies or errors in their expense reports and for ensuring that their expenses are accurate and properly documented.
• A corporate card policy should include a clear definition of what constitutes a prohibited expense and a process for reporting and addressing any issues that may arise.

By establishing and enforcing a clear corporate card policy, small law firms can help prevent financial and compliance issues, protect against disciplinary action, and maintain a professional and trustworthy image.

Establishing Corporate Card Policies

Corporate Card Policy Guidelines for Associates

This means that associates can incur a maximum surcharge of $3 on credit card transactions.

To establish a corporate card policy, consider the following steps:

• Determine the type of cards to be used (e.g. debit, prepaid, or rewards cards).
• Establish a clear approval process for card purchases (e.g. manager approval, department approval, or self-approval).
• Set a standard rate for the surcharge (e.g.
• Specify the documentation required for card purchases (e.g. receipt, invoice, or credit card statement).
• Define the timeline for approval and payment of card purchases (e.g. within 24 hours or on the same day).
• Establish a process for disputing or reversing card purchases.
• Consider implementing a tracking system to monitor and record card purchases.
• Review and update the policy periodically to ensure it remains compliant with relevant laws and regulations.