T&E meaning: What it is and why it’s important

When a company sends a large group of employees abroad, travel expenses can quickly turn into mass confusion. Without clear guidelines on reimbursements, approval procedures, and documentation, employees and accounting teams are left with a mess of receipts and claims to untangle. 

This is where a detailed T&E policy comes in: It gives structure and guidance to ensure better coordination between employees and their finance teams. 

In this guide, we’ll break down the meaning of T&E, what a strong policy must include, and why guidelines are essential for tax compliance, team morale, and effective budgeting

What does T&E stand for in business? 

T&E means travel and expenses, which refer to the costs associated with business travel. These expenses typically include predictable line items like airfare, transportation, accommodation, and meals. T&E also covers other costs incurred while employees travel for work, like laundry service, tips, and team activities. 

T&E can take up a large chunk of a company’s expense management, especially for organizations that regularly send large groups of employees to conferences and events.

Why T&E accounting matters for taxes

The ability to travel for business can be an enticing perk to attract ambitious workers, but it’s also an enormous investment. Airfare, lodging, meals, conference fees—it all adds up. The good news is that necessary travel expenses are tax-deductible. 

The IRS has specific guidelines about what is and isn’t a justifiable business travel expense. For example, transportation and lodging for business-related activities are business expenses, but lavish gifts for colleagues aren't. This means that clear expense report guidelines, accounting practices, and documentation are essential to minimize errors.

When your travel and expense policy aligns with IRS rules, you keep management on the right side of an audit. It keeps your records tidy and ensures you maximize your travel and expense budgets. Clear, defined guidelines make it easier to organize expense reports, track business travel costs, and identify what incurred costs can be reimbursed or deducted. 

What falls under T&E expenses? 

When your team is on the road, travel expenses pile up fast—especially if you have nearly a dozen team members attending a conference or assisting a business expansion. Here’s a breakdown of what travel allowances are typically included in a T&E expense report. 

Accommodations

Hotel costs are necessary business travel expenses. Just make sure that lodging is reasonable and in line with company policy: A fancy penthouse suite or all-inclusive resort might be considered lavish and extravagant to the IRS. 

Meals and per diem

Some companies offer a daily per diem allowance for meals, while others prefer to reimburse employees based on actual expenses. 

The general rule for keeping meals tax-deductible is to keep them reasonable. That means restaurants with average meal prices, not a five-course feast at the finest restaurant in town. As a good rule of thumb, meals should align with the business purpose at hand. Cash tips are deductible as long as business travelers document them.

Transportation

Transport includes everything from flights and train tickets to car rentals, taxis, rideshares, and airport shuttles. For employees who prefer to use their own cars, transport costs can be reimbursed by tracking mileage at the start and finish of a business trip. 

‍Engine’s all-in-one platform makes it easy for corporate travelers to book their car rentals. You can connect directly with rental services and compare prices without bouncing between a dozen tabs, making it simple to stay within your business travel budget. 

Entertainment and gifts

Business dinners, client meetups, and even small gifts for stakeholders are part of doing business on the road. These expenses can fall under T&E as long as they serve official business purposes and are within a reasonable budget. 

The IRS caps tax-deductible gifts at $25 per year per person, excluding small costs like packaging, engraving, or shipping. 

Incidentals

Small costs that pop up as a business trip evolves, such as laundry service, photocopies, or tips for hotel staff, all fall under the category of an incidental. While they might seem minor, it’s important that business travelers track incidentals for reimbursement—otherwise, they might get stuck with the bill. 

What should a travel & expense policy cover?

Defining which corporate travel expenses count as legitimate T&E reimbursements or deductibles is the first step in clarifying travel allowances for employees. 

A comprehensive T&E policy also includes guidelines for reimbursements, approval processes, and required documentation, ensuring workers and accounting are on the same page. 

Guide on how to book travel

Employees need to know the rules for the booking phase of their travel plans. Company policy might require business travelers to work with a specific travel agency or booking platform that offers better rates or has the flexibility to book with their preferred airlines, hotel chains, and car rental services. 

Travel and accommodations are the most significant business expenses, and clear spending and reimbursement limits should be established for their costs. When employees understand which expenses are allowable, they can make smarter choices and avoid awkward moments, like a first-class upgrade that doesn't meet approval standards. If incurred expenses unexpectedly fall on the employee, it can impact job satisfaction. 

Guide to paying for business travel

This part of the policy should outline if travel arrangements require pre-approval or if employees have discretion over their own budgets. If management provides employees with a company credit card, they’ll generally set strict guidelines and limits on what it can be used to pay for.

Guide to reporting expenses

To ensure timely reimbursement, employees need a set process for tracking expenses, submitting reports, and obtaining approvals. Travel managers must decide if employees are required to turn in reports or if they receive a standard per diem fare.

For employees required to submit detailed expense reports, the travel policy should specify what type of documentation is required (for instance, paper receipts, photos uploaded to an expense management software, or credit card statements) and clear timelines for reimbursements. 

Plan your next business trip with Engine

Managing business travel expenses shouldn’t be a juggling act. The right tools let you focus on getting your team where they need to go—not sorting through a mountain of paper receipts and approvals. 

Engine simplifies corporate travel planning by merging flight, hotel, and rental car access into one streamlined platform. With Engine, you can book, manage, and track expenses in real time. Let us handle the details while you plan hassle-free travel for your team.