What counts as a business expense?

A business expense is any cost that is necessary for running the company, approved under your company’s policy, and properly documented. Examples include salaries, rent, software, and travel.

What is the difference between a business expense and a personal expense?

A business expense serves a company purpose, while a personal expense serves your private life. Business expenses are paid for by the company, and personal expenses are not.

Are business expenses tax-deductible?

In most jurisdictions, many business expenses are tax-deductible if they are ordinary and necessary for your business. Proper documentation is critical.

How should employees submit business expenses?

They should typically use an expense management system. Best practice is to use corporate cards so that charges flow in automatically, attach clear receipts, and submit expenses on a regular cadence. Platforms like Navan Expense streamline this and reduce manual work.

How can companies control business expenses without hurting productivity?

Key tactics include writing a clear expense policy, using tools that apply the policy at the time of booking, setting budgets, and monitoring spending by team and category.

What is travel and expense, and how does it relate to business expenses?

Travel and expense stands for travel and expense. It is a major category of business expenses that includes flights, hotels, meals, and client entertainment. Because the travel and expense management is often large and decentralized, it benefits from dedicated tools like Navan.

How can we get better visibility into our business expenses?

You can centralize travel through a booking platform like Navan, use one expense system for all employee expenses, standardize your categories, and build dashboards to track spending.

What is Business Expense?


Also known as	Operating expenses, company expenses, business costs
Category	Finance, expense management, accounting
Common in	All businesses, especially those with employees, offices, travel, and recurring vendor payments

What Are Business Expenses?

Business expenses are the costs a company pays to operate, grow, and support its work, covering everything from payroll and rent to software, travel, and shipping.

These expenses must be for business purposes, not personal use. They can be large, like salaries and office leases, or small, like a monthly SaaS subscription or a taxi to a client meeting.

This matters because business expenses directly affect profit, cash flow, and taxes. For example, a company that does not track expenses well may overspend on travel, duplicate software tools, or pay for unused subscriptions. In travel and expense management, understanding business expenses helps you set budgets, control spending, and decide what employees can and cannot expense.

Understanding Business Expenses in Detail

Key Categories of Business Expenses

Companies usually group business expenses into categories like:


Payroll and Benefits	Salaries, bonuses, health insurance, and retirement plans
Rent and Facilities	Office rent, utilities, cleaning, and supplies
Technology and Software	SaaS subscriptions, data storage, and devices
Travel and Expenses (T&E)	Flights, hotels, meals, and ground transportation
Sales and Marketing	Advertising, events, and sales commissions
Professional Services	Legal, accounting, and consulting fees
Operations and Logistics	Shipping, warehousing, and maintenance

Travel and expense platforms like Navan focus heavily on the travel and expense slice but also connect to the wider expense picture.

Employee-Initiated vs. Vendor-Initiated Expenses

Employee-initiated include:	Vendor-initiated expenses include:
Travel bookings, meals, and ad hoc office supply purchases These usually show up via expense reports or a travel and expense system.	Invoices from landlords, SaaS vendors, and agencies These are often handled by accounts payable (AP) teams

Employee-initiated include:

Vendor-initiated expenses include:

Travel bookings, meals, and ad hoc office supply purchases

These usually show up via expense reports or a travel and expense system.

Invoices from landlords, SaaS vendors, and agencies

These are often handled by accounts payable (AP) teams

Modern platforms like Navan sit at the intersection of employee spending and vendor payments, especially for travel suppliers.

Why Business Expenses Matter

Companies that manage business expenses well tend to be more profitable, predictable, and efficient.

Here is why managing business expenses is so important:

Profitability and Runway

Expenses directly reduce profit. For startups, they also eat into the available runway. Keeping expenses aligned with strategy is vital for growth.

Budgeting and Forecasting

You cannot plan for the future if you do not know where your money is going today. Clean, categorized expense data lets finance teams forecast accurately.

Cost control and Optimization

Seeing patterns in expenses helps you negotiate better rates, cut waste, and shift spending to high-ROI activities.

Compliance and Audits

You must be able to show that business expenses are legitimate, approved according to policy, and backed by receipts where required.

Employee Experience and Trust

Clear rules, quick approvals, and fast reimbursements improve morale. Confusing or slow processes frustrate employees.

How Business Expenses Work in Practice

Typical Expense Flow for Employee-Driven Costs

➡️ A purchase happens. An employee books travel in a platform like Navan or buys something with a corporate or personal card.

➡️ Information is captured and documented. For travel through Navan, trip and cost data are automatically captured. For other card purchases, receipts are captured via an expense app like Navan Expense.

➡️ The expense is submitted and coded. The employee submits an expense report with the category, business purpose, and cost center.

➡️ The approval workflow runs. A manager or budget owner reviews and approves the expense. Policy rules help flag out-of-policy items.

➡️ Payment and posting occur. Finance reimburses the employee or pays the corporate card bill and then posts the expense in the accounting system.

Practical Scenarios: Business Expenses in Corporate Travel

Scenario 1: Business Trip With Multiple Expenses
A salesperson flies from Chicago to London. In Navan, the flight and hotel are booked in-policy, with receipts captured automatically. Meals and taxis are expensed via Navan Expense with photos of the receipts. Result: The manager approves the trip, and finance sees all costs tagged to the client or opportunity in real time.

Scenario 1: Business Trip With Multiple Expenses

A salesperson flies from Chicago to London. In Navan, the flight and hotel are booked in-policy, with receipts captured automatically. Meals and taxis are expensed via Navan Expense with photos of the receipts.

Result: The manager approves the trip, and finance sees all costs tagged to the client or opportunity in real time.

Scenario 2: SaaS Subscriptions Creeping Up
Different teams separately buy similar SaaS tools with corporate cards. Finance pulls a report of "software" expenses and finds duplicates. Result: The company consolidates its tools, negotiates better rates, and tightens the approval rules for new subscriptions.

Scenario 2: SaaS Subscriptions Creeping Up

Different teams separately buy similar SaaS tools with corporate cards. Finance pulls a report of "software" expenses and finds duplicates.

Result: The company consolidates its tools, negotiates better rates, and tightens the approval rules for new subscriptions.

Scenario 3: Remote Work and Equipment
New remote employees need chairs and monitors. The company policy allows a one-time equipment budget. Result: Employees buy the items and submit the expenses under "Home Office Equipment." Finance tracks the total remote equipment spending and adjusts the budget as needed.

Scenario 3: Remote Work and Equipment

New remote employees need chairs and monitors. The company policy allows a one-time equipment budget.

Result: Employees buy the items and submit the expenses under "Home Office Equipment." Finance tracks the total remote equipment spending and adjusts the budget as needed.

Common Challenges and Solutions With Business Expenses

Challenge 1: Poor visibility into where money is going.

Solution: Centralize travel and purchases through a platform like Navan. Use a unified expense system for all employee-initiated spending and standardize your expense categories.

Challenge 2: Out-of-policy or wasteful spending.

Solution: Create a clear expense policy. Use tools like Navan that enforce policy at the point of booking and expense submission.

Challenge 3: Manual, slow expense processes.

Solution: Move to an automated expense management solution with mobile receipt capture and card feed integrations. Navan combines booking, payment, and expensing to cut down on manual work.

Challenge 4: Misclassification and messy data.

Solution: Define a clear chart of accounts and expense categories. Use automation to suggest categories based on the merchant and context.

Challenge 5: Reimbursements are slow or inconsistent.

Solution: Set clear SLA targets for reimbursements (e.g., pay within X days of approval). Automate as much as possible and encourage the use of corporate cards to reduce reimbursement volume.

Aspect	Business Expenses (OPEX)	Personal Expenses	Capital Expenditures (CAPEX)
Primary Purpose	Day-to-day company operations and revenue generation	Individual needs and private life	Long-term investment in business growth/assets
Payer	The company (or reimbursed by the company)	The individual (out-of-pocket)	The company (major investment)
Accounting	Fully deducted in the current tax year	Non-deductible for the business	Capitalized and depreciated over several years
Travel Examples	Airfare, hotel stays, client meals, Uber rides	Weekend sightseeing, souvenirs, family meals	Purchasing a fleet of company cars or travel software
Core Rule	Must be "ordinary and necessary" for work	Never to be charged to the company	Benefits the business for more than one year

Expense policy: The rules that define what employees can spend company money on.
Expense management system: Software used to capture, approve, and report business expenses. Tools like Navan Expense automate this process.
Travel and expense (T&E): A major category of business expenses. It is often managed with specialized tools like Navan.
Accounts payable (AP): The team responsible for paying vendor invoices.
Cost center: A financial bucket (like "Sales US") used to track where expenses belong.
Budget: A planned spending limit for a team or project.
Reimbursement: Payment back to employees for out-of-pocket business expenses.
Spend visibility: The practice of analyzing expense data to see patterns and optimize spending.

Implement a modern expense system that automatically flags non-compliant spend, simplifies itemization, and captures massive tax-deductible savings. Get started.

FAQ

A business expense is any cost that is necessary for running the company, approved under your company’s policy, and properly documented. Examples include salaries, rent, software, and travel.
A business expense serves a company purpose, while a personal expense serves your private life. Business expenses are paid for by the company, and personal expenses are not.
In most jurisdictions, many business expenses are tax-deductible if they are ordinary and necessary for your business. Proper documentation is critical.
They should typically use an expense management system. Best practice is to use corporate cards so that charges flow in automatically, attach clear receipts, and submit expenses on a regular cadence. Platforms like Navan Expense streamline this and reduce manual work.
Key tactics include writing a clear expense policy, using tools that apply the policy at the time of booking, setting budgets, and monitoring spending by team and category.
Travel and expense stands for travel and expense. It is a major category of business expenses that includes flights, hotels, meals, and client entertainment. Because the travel and expense management is often large and decentralized, it benefits from dedicated tools like Navan.
You can centralize travel through a booking platform like Navan, use one expense system for all employee expenses, standardize your categories, and build dashboards to track spending.