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Accountable Plans

If you have been around S-corporations, you may have heard talk of “Accountable Plans”. What are they exactly? How do you set one up? What items qualify for reimbursement?

  1. What is an S Corp accountable plan? An accountable plan allows a company's employees to receive reimbursement for business expenses paid from personal funds. When it comes to an S Corp, the business owner may also be an employee

  2. How do you set one up? To offer an accountable plan, an employer must comply with three standards:

  • The expenses must have a business connection;

  • The expenses must be substantiated within a reasonable period; and.

  • The employee must return any money not spent to the employer, also within a reasonable period.

It is also highly recommended that you have your accountable plan documented in writing.

3. What items qualify for reimbursement under an accountable plan?

A reimbursable expense is an expense that a business incurs on behalf of the customer while conducting their business. These expenses may include travel, delivery fees, currency conversion fees, office expenses, and business phone calls.

The most common accountable plan reimbursements for S Corp owners include the home office, mileage reimbursement, and cell phone reimbursements.

If you would like more information about this type of arrangement or help setting up something similar for your company, you can book a zoom consultation here:

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