How can you create an accountable plan?

Sep 08, 2023


Creating an accountable plan is crucial for any organization looking to streamline processes, improve efficiency, and ensure transparency in financial matters. An accountable plan provides guidelines and procedures for employees to follow when incurring and reporting business expenses. By implementing an accountable plan, businesses can effectively manage expenses, maintain accurate records, and comply with tax regulations.

Benefits of an Accountable Plan

An accountable plan offers several benefits to both employers and employees. Firstly, it allows businesses to deduct legitimate business expenses from their taxable income, reducing their overall tax liability. Additionally, employees are reimbursed for their out-of-pocket expenses without being subject to income tax on the reimbursement.

Creating an Accountable Plan

When developing an accountable plan, it is important to consider the following key components:

  1. Expense Eligibility: Clearly define what expenses are eligible for reimbursement under the plan. This ensures that employees understand which expenses are considered business-related and can be submitted for reimbursement.
  2. Documentation Requirements: Establish guidelines for the type of documentation required to substantiate expenses. This may include receipts, invoices, or other supporting documents. Encourage employees to retain and submit these documents promptly.
  3. Submission Deadlines: Set deadlines for employees to submit their expense reports. This helps maintain a timely and efficient reimbursement process, ensuring expenses are recorded accurately and promptly.
  4. Approval Process: Define the process for reviewing and approving expense reports. This may involve multiple levels of review, such as managers or finance departments, to ensure compliance with the accountable plan guidelines.

Best Practices for Implementing an Accountable Plan

Follow these best practices to effectively implement an accountable plan:

  • Communication: Clearly communicate the accountable plan guidelines to all employees. Provide training or informational sessions to ensure understanding and compliance.
  • Consistency: Apply the accountable plan consistently across all employees and departments. This ensures fairness and minimizes confusion or potential disputes.
  • Regular Review: Periodically review and update the accountable plan to reflect changes in business needs, tax regulations, or industry practices.
  • Record Keeping: Maintain accurate records of all expense reports, reimbursements, and supporting documentation. This facilitates audits and ensures compliance with tax regulations.


Creating an accountable plan is essential for organizations seeking to manage expenses effectively and maintain financial transparency. By establishing clear guidelines, documenting expenses, and implementing an approval process, businesses can streamline their reimbursement procedures and ensure compliance with tax regulations. Implementing best practices and regularly reviewing the accountable plan will further enhance its effectiveness and contribute to a more efficient and accountable financial system.