Incidental expenses, which are sometimes simply referred to as "incidentals," are costs that are incurred as part of daily life during business activities. The term most commonly applies to expenses that arise during business travel. Examples include taxi fare, the cost of meals, additional hotel charges like laundry services, and the cost for an Internet connection. Personal expenses, such as a hair cut or purchase of clothing or toiletries, are usually not covered.
Each business handles incidental expenses slightly differently. Some expect their employees to pay for such expenses out of pocket. In this case, it is most common for the employees to submit a list of the items that they paid for with their own funds along with receipts to back up their claims, and the company will then issue reimbursement. Most companies reimburse their employees by cutting them a check that is separate from their paycheck so that it is clear that the reimbursement is separate from the employee's income. This practice is important for accounting and tax purposes.
Other companies provide their employees with cash or a credit card to be used for incidental expenses. Cash is usually given to the worker out of the company's petty cash, and any that remains much be returned at the end of the business trip. As with expenses that are paid for out of an employee's personal funds, those paid for out of petty cash or with a company's credit card must be backed up with receipts. For this reason, it is very important for an employee to keep detailed receipts for every purchase that he makes or fee that he pays while traveling for business.
Most companies have a policy about incidental expenses in their employee handbooks. There are usually limits on the kind of expenses that a company will pay for and the amount that a company will cover for these kinds of expenses. For example, companies almost always cover an employee's meals during business trips, especially if the employee will be dining with a client or potential client, but there are usually caps on the costs of those meals. While an employee may be allowed to take the client to a nice restaurant and offer to pay for a good bottle of wine or other expensive alcoholic beverages, he usually cannot spend an unreasonable amount of money.