Once employees start making purchase decisions on the business’s behalf — office supplies, parking, small tools, meals — there’s a real decision to make: reimburse them for what they spend, or hand out a company card. Both carry tax and accounting consequences worth understanding upfront.
The time-savings case isn’t always what it looks like
A company card skips expense reports and reimbursement checks — unless those charges need to be allocated back to specific clients or jobs for invoicing. At that point, someone still has to reconcile every statement against receipts and job orders, and the time savings mostly evaporates.
Trust matters more as you grow
Handing out a company card requires real trust that it won’t be misused. That trust gets harder to extend as a business grows, adds locations, or sees more employee turnover — all situations where a reimbursement model tends to hold up better.
Use tax exposure is a bigger risk than most owners realize
When employees buy supplies online using a company card — especially while working remotely — sales tax isn’t always collected at the point of sale. That gap creates a use tax liability the business is responsible for reporting, and state auditors have been requesting card statements specifically to find these gaps.
Reimbursement works best under an accountable plan
Structuring reimbursements as an IRS “accountable plan” keeps reimbursed amounts from being treated as taxable income to the employee, and preserves the deduction for the business. That means setting clear rules on eligible expenses, a standard reporting form, reporting timelines, and receipt requirements.
The trade-off between the two options usually comes down to time versus control. Which one makes sense depends on how your business actually operates — worth working through before defaulting to whichever seems easier.