Client expenses

[Michael Breen]

I'm going to start work on my first project that will require me to travel. How should I handle the expenses? Do I build the costs into the contract price or do I submit the expenses to the client for reimbursements? Or does this vary from client to client based on the company policy?

How do you handle travel (airfare, hotel, taxi, meals, etc) expenses?

Thanks.
Mike

[Jarkko Laine]

If the client requires you to travel, you normally submit the
expenses to them. You should mention this in the contract, of course.

//jarkko

--
Jarkko Laine
http://jlaine.net
http://dotherightthing.com
http://www.railsecommerce.com
http://odesign.fi

[Robert Dempsey]

> If the client requires you to travel, you normally submit the
> expenses to them. You should mention this in the contract, of course.

Agreed. I believe the "standard" is travel to and from, and a per-
diem. Of course, everything is negotiable, but get them to cover the
travel at the very least.

Robert Dempsey

http://www.techcfl.com
http://www.railsforall.org

[Brian Cooke]

My understanding was that your client paying for travel is one of the
red flags the IRS looks for when trying to confirm/deny your self
employed status (vs. employee). Meaning, if the client payed for your
travel, they might use that against you to declare you an employee
vs. contractor.

I have no idea how big of a concern this is, or how often the IRS
goes around confirming contractor status, but it seems worth knowing
about (especially if you're already muddying the line between
contractor / employee with other practices with a client).

BrianC
http://roobasoft.com
http://briantcooke.com

[Jarkko Laine]

On 8.6.2007, at 17.26, Brian Cooke wrote:
> My understanding was that your client paying for travel is one of the
> red flags the IRS looks for when trying to confirm/deny your self
> employed status (vs. employee). Meaning, if the client payed for your
> travel, they might use that against you to declare you an employee
> vs. contractor.

I don't have any personal experience with the US IRS but I think it's
pretty clear that if a company needs to fly a consultant from across
the continent to do some on-site consulting, they will cover for the
expenses for that. At least that's from what I know a fairly global
standard (and common sense). I don't understand how that would make
you an employee any more? Also, how would IRS know who pays what if
you buy the tickets yourself and add them to your bill?

Actually, here's a quote from an IRS guide "IRS Internal Training:
Employee/Independent Contractor " (http://www.irs.gov/businesses/
small/article/0,,id=99921,00.html):

"Businesses often pay business or travel expenses for their employees.
However, independent contractors’ expenses may also be reimbursed.
Independent contractors may contract for direct reimbursement of certain
expenses or may seek to establish contract prices that will reimburse
them
for these expenses. You should, therefore, focus on unreimbursed
expenses, which better distinguish independent contractors and
employees,
inasmuch as independent contractors are more likely to have unreimbursed
expenses."

[Michael Breen]

This is the quote from the IRS that made me ask the group how he or she handles it.

On 6/8/07, Jarkko Laine <jar...@jlaine.net > wrote:

On 8.6.2007, at 17.26, Brian Cooke wrote:
> My understanding was that your client paying for travel is one of the
> red flags the IRS looks for when trying to confirm/deny your self
> employed status (vs. employee). Meaning, if the client payed for your
> travel, they might use that against you to declare you an employee
> vs. contractor.

I don't have any personal experience with the US IRS but I think it's
pretty clear that if a company needs to fly a consultant from across
the continent to do some on-site consulting, they will cover for the
expenses for that. At least that's from what I know a fairly global
standard (and common sense). I don't understand how that would make
you an employee any more? Also, how would IRS know who pays what if
you buy the tickets yourself and add them to your bill?

Actually, here's a quote from an IRS guide "IRS Internal Training:

Employee/Independent Contractor " ( http://www.irs.gov/businesses/

[Benjamin Curtis]

Here's the Expenses section of my standard contract:

Contractor shall be responsible for all expenses incurred while
performing services under this agreement. However, Client shall
reimburse Contractor for all reasonable travel and living expenses
necessarily incurred by Contractor while away from Contractor's
regular place of business to perform services under this Agreement.
Contractor shall submit an itemized statement of such expenses.
Client shall pay Contractor within 30 days from the date of each
statement.

--
Benjamin Curtis
http://www.bencurtis.com/ -- blog
http://agilewebdevelopment.com/rails-ecommerce -- build e-commerce
sites with Rails

[Michael Breen]

Awesome. Thanks!

[Robert Dempsey]

Good stuff Ben. I am going to use that too ;). Michael, make sure that
anything you charge to the client is on an invoice. That way if the
IRS does get uppity you can show that you billed it to the client.

[Michael Breen]

Right, thanks Robert and thanks to every who responded.

[Drew Blas]

The key with the IRS is definitely who's paying for the travel. The
key difference is how those expenses get paid. If you are incurring
them and then billing your client for the costs, that falls under a
normal independent contractor relationship. If the company buys your
ticket for you, or gives you an expense account charged directly to
them, then those are actions that fall under a traditional employment
situation.

If you bill your client for travel expenses (or any expenses, for that
matter) be sure that you're counting the expense AND the income on
your tax return. e.g. if you've got a $4000 contract and incur $1000
in travel expenses (billed to the client), then your tax returns
should show $5000 in income and $1000 in expenses. That why it is
very clear where money came in and went out and you won't be mistaken
for an employee instead of a contractor.

[Keith]

Care to share a copy of your standard contract? I'm always interested
in what other people are putting in theirs.

-- Keith

On Jun 8, 11:18 am, Benjamin Curtis <benjamin.cur...@gmail.com> wrote:
> Here's the Expenses section of my standard contract:
>
> Contractor shall be responsible for all expenses incurred while
> performing services under this agreement. However, Client shall
> reimburse Contractor for all reasonable travel and living expenses
> necessarily incurred by Contractor while away from Contractor's
> regular place of business to perform services under this Agreement.
> Contractor shall submit an itemized statement of such expenses.
> Client shall pay Contractor within 30 days from the date of each
> statement.
>
> --

> Benjamin Curtishttp://www.bencurtis.com/-- bloghttp://agilewebdevelopment.com/rails-ecommerce-- build e-commerce

[oz]

it is good to look at your side of the deal, and to cover for the IRS,
however the important bit is the customer. I used contractors over and
over and the most painful situation is when you get a huge expense
bill on top of the budgeted fees.
Don't get me wrong, when I am consulting I always bill my expenses,
however any job quote includes a clear definition of what will be
expenses and an approximation of it.

I have never seen expenses argued when they were discussed clearly at
first, and off course everyone expect to have them on top of the job
fee

bernard