Pluto Wins Big at the MENA Fintech Awards

The realities of the modern business world require companies to keep a tight hold on their spend management.

We’re not just talking about how you track expenses or reconcile your debts; that’s basic stuff. No, we’re talking about the entire process, from deciding who has the spend rights to analyzing how business spending affects your cash flow and taxes.

The more your business expands, the more crucial (and complex) your expense management process becomes. Spending analysis allows you to correct imbalances, watch for fraud and employee theft, and prepare for regulatory filings.

However, it’s also a cumbersome, time-consuming process that, without the use of the proper platform, requires quite a bit of man-hours to complete.

Modern spend and card management needs to be more sophisticated, intuitive, and built on the needs of finance teams, accountants, CFOs, owners, and employees!

That’s why, at Pluto, we firmly believe in the power of proper corporate card management. Establishing clear policies, outlining appropriate spending limits, and designing airtight analysis protocols can keep your finances in check.

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Modern Corporate Credit Card Programs

Traditionally, businesses relied on employee reimbursement for out-of-pocket expenses to facilitate team and department spending. While using employees to frontload business costs helps with float, it also creates potential hardships and liabilities.

Moreover, the process of submitting, reimbursing, and properly cataloging expenses is grotesquely time-consuming for your finance team.

In part, corporate credit cards were designed to take the pressure off corporate finance teams. They make expense management easier, simplify spending procedures, and digitize the bulk of your spending.

Managing corporate credit cards can get quite complex. Adding new cardholders, suspending or closing accounts, or untangling business and personal expenses could take hours of paperwork and phone calls.

But it does not have to be like that. At Pluto, we leveraged our corporate experience, had countless talks with our users, and came up with solutions to every bottleneck of card management.

On-demand corporate cards

For employees to be able to make business expenses, they will need a corporate p card. In our day and age, most of their spending will be online.

Pluto provides you with an unlimited number of virtual cards that can be easily issued right from the dashboard.

If a physical card is needed, you will go through the same simple process, and the card will be delivered to you in just a couple of days.

Receipt Capture and Expense Tracking

Corporate credit cards feed your business expenses into a centralized monthly report. With Pluto, submitting a receipt is as easy as taking a picture with your phone, literally.

When the expense is submitted, it is immediately reflected in the account report.

These reports provide each department head and finance team with the visibility needed to:

• Link credit card transactions to the right employee
• Crackdown on overspending
• Maintain business-wide cashflows
• Maximize efficiency

With Pluto, you can easily filter through various expenses, check which expenses are still pending, and see the details of that particular spending team-wide.

Increased Flexibility

Corporate cards also provide businesses with the flexibility to take the approach that suits their needs. For instance, your business may assign corporate cards only to key employees and management or traveling employees.

Workers who make only occasional purchases can use Pluto virtual or pre-loaded cards with one-time or limited spend codes.

Ultimately: More Control

Aside from these perks, company credit cards allow you to maximize your data collection and improve your analytics.

You can use this information to curb unnecessary spending, generate insights, and even negotiate better rates with vendors.

But without a proper corporate card management program in place, it’s all too easy for the system to turn upside-down.

What is Corporate Card Management, and Why is it Important?

A corporate card management platform allows business leaders to proactively wrangle company expenditure concerns from multiple fronts.

But to keep everything running smoothly, you also need a well-designed corporate card policy that ensures you are not limiting employees in their work while you are tracking the expenses.

Using corporate cards for operational expenses allows your team to work more efficiently—no more complicated approval processes when buying an online subscription or plane tickets.

But to achieve the balance between flexibility and control, you must have a corporate card management policy. Good corporate card programs:

• Outline rules for use, such as where and how much employees may spend.
• Capitalize on issuer-provided controls to set spending limits.
• Monitor and analyze employee cash flow to minimize inefficiencies.
• Are quick to catch or counteract employee or outside fraud.
• Simplify real-time expense reporting.
• Save time and money by reducing or eliminating physical paperwork.

Above all, a responsible management program frees up resources, putting money back on your balance sheet.

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Best Practices for Efficient Corporate Credit Card Management

The key to managing corporate cards successfully is setting expectations, communicating responsibilities, and setting controls for employee and employer accountability.

Whether you set card limits, lock and unlock cards, issue virtual cards, or code and track expenditures daily is up to you.

Just as long as you design a system that balances control and comfort.

Set Up a Corporate Card Policy

Your company policy should:

• Set expectations and communicate cardholder responsibilities
• Lay out eligibility requirements to receive a card
• Set spend limits for teams, departments, or specific expenditures
• Outline the process for submitting receipts
• Establish clear review and penalty processes for violating these rules

Written properly, your policy should ensure everyone understands their rights and responsibilities. 

Decide Which Employees Will Get Cards

One of the most important components of managing your corporate cards is deciding who receives them.

At first, you may want to stick with assigning cards to upper-level management or department heads. But as your business grows, you may enact policies to permit other employees to receive cards conditionally or permanently, such as your sales team.

Ensuring your cards are in the right hands for the right reasons gives your employees a sense of flexibility and responsibility.

Consider Virtual Cards

You might consider issuing virtual cards when an employee may need one-time or limited access to a corporate card.

With Pluto, you can issue unlimited virtual cards in a matter of minutes and set spending limits as needed.

So the time from the employee request to delivering the virtual card credentials is minimal.

Set Budgets for Each Team and Department

Clear budgets take the guesswork out of reconciling your expenses and provide a “pool” of funds for teams to pull from.

These controls can help curb spending while still providing the funds your business needs to succeed.

Separate Personal and Corporate Expenses

When you design your budgets, it’s crucial to ensure employees know what constitutes a business expense and what doesn’t.

For instance, some companies provide generous food allotments for traveling employees, while others limit corporate card spending to hotel and transportation expenses. In this instance, employees purchasing their own meals would qualify as a personal expense.

You also want to clarify that employees can’t use their company cards for personal expenses that don’t relate to business. Even if they plan to repay you, it must be clear that the corporate card can not be used for these matters.

Have Limits on Cards and Spending Categories

Another way to crack down on corporate card expenses is by setting limits. With Pluto you can set limits when creating a new card, or adjust the limits on the go. 

Review these limits regularly to make sure that everyone has limits that are sufficient to support them in their work. 

Make Expense Reporting Simple

The card expense reporting process shouldn’t take you hours. Submitting an expense in Pluto is a matter of just a couple of clicks.

Drag and drop the receipt into Pluto, add a couple of details and that is it. This efficiency ensures that employees submit all their expenses on time. 

Document Every Purchase – Digitize Receipt Management

When it comes to your expense policy, your corporate credit card statement isn’t reliable enough.

Mandating receipt uploads means that you can verify the accuracy of each transaction for internal and tax-related purposes.

But in the modern world, many vendors are moving away from physical receipts that tear, smudge, or blow away in the wind.

For these instances, consider setting up a corporate email address to provide all-digital vendors.

And for expenses that do generate physical receipts - Pluto allows you to simply take a picture of the receipt with your phone and upload it to the expense management system!

Monitor Employee Spending Habits

One enormous benefit of corporate cards is the sheer transparency involved.

Every transaction is recorded and automatically categorized, allowing you to monitor corporate card expenses using credit card statements. You can also use this information to identify overindulgent employees and limit any unscrupulous spending habits.

But don’t just wait for the statements to show up monthly. Pluto allows you to proactively set alerts, notifications, and monitor transaction activity, helping you catch problems before they snowball, such as “double-dipping.” (Submitting the same expense twice, by mistake or intent.)

Analyze Expense Reports Regularly

Another facet of corporate card expense reporting is regularly analyzing your reports.

With Pluto, businesses can sort expenditures by vendor, department, employee, or internal expense codes.

Sorting and analyzing your expense reports ensures that even if you have dozens of cards floating around, you can readily monitor and manage the ins and outs.

Integrate with Your Accounting Software

The best way to unlock your corporate cards’ potential is by integrating expense software with your accounting software.

Doing so feeds each corporate credit card expense right into your accounting log, saving hundreds of hours entering, verifying, and double-checking that your corporate card statements match actual business expenses.

Pluto allows you to integrate with all major accounting software.

Key Takeaways

• Efficient corporate card management requires you to use a platform that will allow you to have complete spend control and flexibility.
• This is where Pluto comes in – our platform provides you with all the features and tools necessary to fully manage your corporate card spending.
• A corporate card usage policy is another critical element to keeping spending under control – by setting clear guidelines on what can and cannot be purchased with corporate cards, you can avoid unnecessary expenses.
• Finally, effective communication and training for employees will ensure that everyone is on the same page when it comes to using corporate cards responsibly.

Corporate Cards FAQs 

What is a Corporate Card Program?

A corporate card program issues cards to – and establishes rules for – employees who make purchases for a business.

These purchases can range from buying office supplies to airline tickets. Corporate card programs set guidelines for who can use a card, their spend allowance, and the expense reporting process, among other facets.

What is the Advantage of a Corporate Card?

Corporate credit cards offer multiple advantages, including:

• Eliminating cumbersome reimbursement programs
• Centralizing your expense management system
• Integrating expense tracking features to simplify taxes
• Restricting employee spend based on spend limits, vendors, or products
• Reducing potential delays in the reconciliation process

Plus, many corporate cards connect to accounting software to allow businesses to slash time and hours wasted on expense report management.

What is Corporate Card Expense Management?

Expense management refers to the systems that organizations use to track, review, and pay for business and employee expenses.

Keeping expense management processes tightly controlled ensures that businesses can reconcile their balance sheets.

These expenses include any purchases an employee makes to improve the business, from office supplies to business travel costs.

Often, modern expense reports reflect tons of digital items too, like subscriptions and cloud space.

What is Corporate Card Reconciliation?

The corporate card reconciliation process verifies that corporate card statements match a company’s general ledger.

Businesses rely on these processes to validate transactions, keep expenses reasonable, and prevent fraud. (Not to mention, reconciling the books is essential - come tax time.)

With reports that Pluto generates, the work is minimal. You issue corporate cards, put limits on them, and all the receipts and transactions are stored in the Reimbursement report.

Who is Responsible for a Company Credit Card?

From a legal and liability standpoint, employers and businesses are responsible for all expenses charged to a corporate credit card.

That said, businesses may outline use cases in which an employee is responsible for repaying their own charges, such as when they make personal purchases on their employer’s dime.

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P-cards can replace your corporate credit cards. 

If you rely on credit cards, you would have 2-3 cards issued to the executives, which are shared with the employees. Though it seems a great method to ensure approval and budget control, it has many loopholes.

The finance teams are running after employees for receipts, employees are waiting on OTPs and approvals, and the CFO is not satisfied with the numbers.

You look for alternatives and land on p-cards. 

P-cards (or purchase cards) are corporate cards you issue to your employees for business expenses. Then, be it purchasing a SaaS or making vendor payments, employees use it for all work-related spending. 

What are Corporate P cards?

Corporate P cards are company purchase cards that employees can use to make business purchases without going through the traditional purchase request and approval process. Corporate P cards make it easy for companies to manage account payables & automate expense accounting while staying in complete control of their spending.

What Is the Difference Between a Credit Card and a P-Card? 

While both cards are used exclusively for business expenses, there are many differences.

Credit cards make expense management difficult, with no visibility into where the money is going. An executive shares a single card with their team, creating a chaotic financial situation. 

The card owner struggles to manage a constant stream of payment requests. Employees are left hanging with delayed payments, waiting for approvals. Especially in bigger companies, finance teams struggle with reconciliation and zombie spending (which is when a company continues to pay for something that isn’t used anymore, or when it pays for services that former employees had used).  

On the flip side, if you use p-cards, you can issue each employee a separate card for corporate expenses. Each card has a specific budget and restrictions to ensure control and facilitate approval without delays. 

For instance, you issue a card with a $500 monthly limit, restricted to office supply vendors like "Office One."

In this way, you manage budget control and approvals without losing visibility or having to micromanage. 

How can Businesses use Corporate P Cards for Employee Expenses?

Moving from a credit card to a P-card isn’t complicated. Here is a step-by-step process of how you can provide your employees p cards and start using them:

Step 1: Generate Corporate Cards

The first step is to choose the type of card you want for your employees: physical or virtual. While a virtual card can be set up in under a minute, a physical card takes about 2-3 days to get delivered.

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Physical cards work well for those who travel or have on-site jobs, making petty cash management easy. Contrarily, virtual cards support secure online purchases, such as buying SaaS tools or paying for digital advertising campaigns.

Once you decide whom to give a card and what type, set the budget and policies. You can incorporate the following policies to customize the cards:

• Specify the budget and replenishment frequency of the budget on the card- daily, monthly, or yearly.
• Define the purpose of cards by enabling only specific general ledgers (GL), labels, and tax codes.
• Switch on/off the ATM withdrawal option.
• Enable auto-lock for cards in case of receipt policy violation, where if the receipt isn’t attached in 7 days, the card is frozen. 

All these customization options offer you better control without having to chase employees later. Deciding the budget, frequency, and vendors ensures that the card is used rightfully. 

For instance, you would switch off ATM withdrawal for virtual cards that are meant for buying SaaS tools. Likewise, you can establish a monthly replenishment schedule to maintain sufficient funds while preventing excess spending.   

Apart from this method, your employees can also request to activate the P-cards. They explain the card's purpose, after which the admin can approve/reject the request. 

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Now that the employees have cards in their hands, let’s see how you can better manage corporate spending with them. 

Step 2: Manage Expenses Via Centralized Dashboard

Every expense on the corporate p-card is visible in real time on a centralized transactions dashboard. You get key information such as merchant name, expense category, card information, amount, and approval status.

Along with this dashboard, you get a dedicated tab for each expense where all its information is available. 

You can review the key information such as receipt, department, merchant, date/time, expense category, etc. you can also download the receipt, approve/reject the expense, and check the activity log. 

The activity log keeps track of all the conversations that have been happening with a particular transaction. Traditionally, companies use email and Slack, which makes communication messy. With this log, they can keep all their conversations and important information in one organized place. 

Step 3: Create Approval Workflows

Approval workflows ensure that each expense follows a defined hierarchy for approval by the right stakeholders. You can customize them depending on different amounts, departments, and other factors. 

It is a simple no-code system where you create workflows based on if-then rules.

A custom approval workflow ensures timely and effective approval without having to run after dedicated team members. Each of them receives a notification as soon as the expense takes place, and they can approve it easily. 

Approvals and employee reimbursement become easy with a frictionless workflow like this. 

Step 4: Report and Reconcile Expenses

Integrating your cards with your accounting systems becomes the last step to facilitate reporting and reconciliation. 

Once you integrate with your accounting software, you can enjoy complete visibility and control over your corporate expenses. 

You get a dedicated insights window to track expenses and identify trends. You can add custom filters and export these for further analysis. 

To understand the entire process better, book a demo and see how you can benefit from switching to a corporate p card. 

Why Shift From Traditional Methods to Corporate P Cards?

Credit cards seem simpler, where a bank gives a few credit cards to share among the teams. But here’s why it doesn’t work:

• It is difficult to track who spends what, how much, and why.
• Employees wait for OTPs and approvals, delaying payments and reimbursements.
• The chances of zombie spending increase because the same card is shared. This also becomes one of the loopholes which leads employees to misuse the cards.
• The admins have to chase employees for receipts during reconciliation.

While these are just a few, relying on credit cards can cause chaos in expense management. Here are some reasons corporate p-cards are a more suitable option today:

No More Shared Cards

You ditch the whole system of sharing credit cards, which is the root cause of limited visibility. With corporate p cards, you can issue any employee a dedicated card for specific expenses. 

So, if you issue Rashid from the marketing department a virtual corporate card for running Ads, he can not use it otherwise. He will be accountable for any unnecessary expenses beyond the specified budget.

This means more visibility and control over corporate expenses.  

Easy Receipt Management

Corporate cards make receipt management easier with OCR technology in the following ways:

• Submitting expense reports at the end of the day becomes easier as it auto-populates all the information
• Uploading receipts in bulk upload with OCR handling the rest makes the process faster
• Detecting duplicate receipts becomes simpler as OCR eliminates the risk of manual errors 

Apart from OCR, you also get the option to split the transactions to make the accounting process easier. Here, for each transaction, you can split the amount into a separate category, GL account, tax code, etc. 

For instance, a $300 expense can be split into $200 for software purchases and the remaining $100 as consulting fees. Each will have a specific category, GL account, and corresponding tax code.

Budget Control

Corporate cards give more visibility and control over finances. 

Although both credit cards and p-cards can have specific budgets, p-cards enable you to set specific policies and rules. 

For instance, you give an employee a $1,000 monthly budget but restrict them to using the card only for office supplies purchases. 

Similarly, you can set a $500 monthly limit for marketing expenses and restrict the card to "Ad Campaigns" and "Promotions," ensuring focused spending.

Another benefit is to assign monthly, yearly, and weekly budgets.

For instance, you can allocate an annual budget of $500,000 for the marketing department but assign a weekly budget of $10,000 for ad campaigns. 

This facilitates flexibility for the teams to function better and gives the finance team more control over resource planning and allocation.

WhatsApp Integration

Receipt uploading becomes simpler when all you have to do is click a picture on WhatsApp and hit send. 

After each transaction, employees get a notification to upload the receipts via WhatsApp. With this simple integration, receipt capturing becomes simple and fast. 

Not only is the receipt captured, but stored under the relevant transaction tab with all its information intact. OCR makes it easier to extract key details and populate expense reports. 

Admins can approve these expenses, and reconciliation becomes a breeze. 

Eliminate Corporate Card Fraud

P-cards give you more control and security. From setting custom policies to raising alerts in case of duplicate receipts, p-cards ensure that employees don’t misuse the cards.

Additionally, the custom approvals workflows and dedicated activity logs reduce the chances of oversight. This system helps prevent unauthorized spending. 

For instance, an employee tries to use the card for a personal expense, like an expensive dinner. 

The custom approval setup will alert the admins. The active activity log with documented conversations will further ensure that no personal expense is charged on corporate cards. 

Get the Most Out of Your Corporate Cards 

Transitioning from credit cards to corporate p cards can be an exciting move. But to make the most of it:

• Set an expense policy outlining the guidelines that will govern the corporate cards. This practice will also become the pillar for a healthier financial environment to support internal control over financial reporting (ICFR) efforts.
• Understand the hierarchies in the company to create approval workflows accordingly. Find a balance between control and micromanagement. Managers should be informed about expenses without being excessively involved in them. 

Do this right, and you will have better visibility and control over your finances. The employees will not be left hanging for approvals. The finance team will be at peace, and the CFO will have more faith in the numbers.

All companies and businesses will incur business expenses, but how can you know what exactly is considered business expenses? And how will the introduction of UAE corporate taxes affect business expenses and income reports?

What are business expenses?

Business expenses are costs a business incurs to run the business properly. In simpler terms, they're expenses made by the business for the business.

With the UAE introducing corporate tax laws in 2023, it's crucial for businesses to be able to track and categorize their business expenses, as some of them may be tax deductible.

While the IRS may divide business expenses into ordinary and necessary business expenses, the UAE takes a different approach.

Ordinary business expenses are anything that is "common and accepted" to a business, whereas necessary expenses are anything that is "helpful and appropriate" to a business but not essential.

The federal tax authority in the UAE does not take a similar approach and only considers business expenses as tax deductible or not. We will discuss this in a later section.

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Examples of business expenses

Business expenses include a wide range of expenses, from insurance to office space, to online subscriptions, such as Zoom, Figma, or Adobe.

Let's break it down; if a design agency bills a client AED 120K per year, that doesn't mean they made a profit of 120K. When a business brings in revenue, it must account for the business expenses made to provide its clients with its services. These services include digital software subscriptions, office rent, employee wage, and/or wifi fees.

Here are some examples of the most common business expenses:

• Advertising and marketing
• Business travel (fuel, airfare, taxis, etc.)
• Employee costs (payroll, salaries, insurance, perks, etc.)
• Employee equipment (such as laptops, monitors, phones, etc.)
• Legal fees
• Office space rent & utilities
• Software subscriptions

While many more expenses are considered business expenses, these are the ones most businesses will incur.

Types of business expenses

When setting up a budgeting plan, business expenses play a vital role in keeping the businesses' financials in check. When preparing a budgeting plan, finance teams typically begin by looking at the three types of business expenses incurred.

These business expenses include:

1. Fixed expenses

Fixed costs are costs that do not change; they happen at known intervals, such as month to month.

With predictable costs, budgeting is more straightforward, as these costs are always expected and never come as a surprise.

Examples of fixed expenses include:

• Rent
• Employee payroll/salaries
• Utility bills
• Insurance

2. Variable expenses

Variable expenses are business expenses that change from month to month. These costs vary depending on a company's production or sales volume; if production or sales increase, variable expenses increase, and if production or sales decrease, variable expenses decrease as well.

Variable expenses are typically a business's largest expense, as some may be unexpected or unaccounted for.

To calculate the variable cost, multiply the quantity of the output by the variable cost per unit of output.

Total variable cost = Total quantity of output X Variable cost per unit of output

Examples of variable expenses include:

• Shipping expenses
• Sales commissions
• Raw materials (used in production)

3. Periodic expenses

Periodic expenses are business expenses that happen infrequently or, sometimes, semi-regularly.

Typically, periodic expenses happen on a quarterly or yearly basis, such as annual car insurance, but can also come as a surprise, such as a company car repair.

Budgeting can be tricky with periodic expenses, especially when expenses are infrequent.

Examples of periodic expenses include:

• Maintenance & repairs
• Merger and acquisitions costs
• Major equipment purchases

Profit and loss statement report

A profit and loss (P&L) statement, also known as an income statement, is commonly used when businesses record business expenses. Through the P&L, businesses can determine their taxable income. This is especially important for UAE businesses with an annual net income above AED 375,000.

The 3 categories of an income statement include the following:

1. Costs of goods sold (COGS)

Costs of goods sold are the costs associated with the production of goods sold by a company. This typically includes direct costs only, such as materials used and labor costs to create the goods sold. Indirect expenses are not calculated regarding COGS; these include sales and marketing.

For a business to determine gross profit, the costs of goods sold must be deducted from its revenue. They also affect how much profit a company makes on its products.

2. Operating costs

For a business to run, operating costs are unavoidable.

Generally speaking, operating costs relate to a business's daily maintenance and administration. These include costs such as COGS, payroll, rent, and overhead costs. However, non-operating costs, such as interest and investments, are excluded from an income statement.

An income statement reflects operating income after operating costs are deducted from revenue.

3. Depreciation

When accounting for depreciation, there are two types to look at:

a. Depreciation expense

A depreciation expense is a loss in value of fixed assets that companies record through depreciation. During the period you use an asset, its value decreases, and the price you originally paid for it is allocated over time.

An example would be a physical asset that loses value over time, such as a car or vehicle.

b. Accumulated depreciation

Accumulated depreciation refers to the accumulated depreciation charge a specific asset has taken as it wears down or becomes obsolete. Accumulated depreciation is shown on the balance sheet, unlike depreciation expenses reported on the income statement.

Personal and business expenses

Knowing the difference between personal and business expenses incurred is vital, especially with the UAE corporate tax law coming up. Business expenses can be used to lower a business's taxable income; however, personal expenses incurred are not considered deductible expenses.

So, what's the difference between personal and business expenses?

Personal expenses

Personal expenses are purchases made for personal reasons and cannot be used as deductible expenses.

If you make a purchase for the business but add in an item for personal use, it is crucial to have two transactions to avoid mishaps coming your way. Having two receipts will help you record and store the receipt so the business expenses can be used as deductible expenses.

Business expenses

If you're making purchases that benefit the business, such as driving more revenue, they can be considered business expenses. When making business expenses, it's essential to keep a record of the purchase by storing the receipts. By doing so, you can use these business expenses to lower your tax liability by deducting the amount from your income.

Tax deductible expenses

We've reviewed personal expenses, the 3 types of business expenses, and what goes into P&L statements. But which of these are considered tax-deductible expenses? In a nutshell, all the above, other than personal expenses. Let's delve deeper into tax-deductible expenses.

Tax deductible expenses are business expenses that help businesses generate revenue. These expenses are deducted from the company's income before applying any taxes.

Examples of tax-deductible expenses:

• Administration fees
• Advertising and marketing
• Bank charges
• Insurance
• Legal fees
• Maintenance and repair
• Office expenses
• Office rent
• Payroll/salaries
• Supplies
• Travel and transportation
• Utilities

Non-deductible tax expenses

Non-deductible tax expenses cannot be deducted from a company's income.

In the UAE, there are 3 main categories for non-deductible tax expenses:

1. Related party payments from the mainland to a Free Zone Person

The related party payments made to a Free Zone Person that is taxed at 0% on receipt of the income will not be deductible for CT purposes. However, if the payment is attributed to a mainland branch of the Free Zone Person, the related party can claim a deduction.

2. Entertainment expenses

Because these types of expenses often also have a non-business or personal element, businesses can deduct up to 50% of the expense incurred to entertain customers, shareholders, suppliers, and other business partners.

3. Other expenses

No deduction will be allowed for certain specific other expenses, such as 

• Administrative penalties
• Recoverable VAT
• Donations paid to an organization that is not an approved charity or public benefit organization.

How to keep track of business expenses

To maintain your business, it's important to track your business expenses. There are several ways to track business expenses; however, you will need to establish a system to account for costs and accurately manage your business.

Here are 6 steps to keep track of your business expenses:

1. Open a business bank account

A business bank account should be completely separate from your personal checking account and must only be used for business expenses/purposes. This will help you manage your business expenses easily and give you eligibility for business credit cards or, even better, Pluto corporate cards.

2. Select an accounting system

If you haven't chosen an accounting system yet, choosing one that's appropriate for your business is vital. Some businesses opt for spreadsheet software, such as Microsoft Excel; however, to simplify the accounting process, we recommend going for accounting software that will automate the process for you.

3. Choose cash or accrual accounting

Choosing cash or accrual accounting typically depends on the size of your business.

Small businesses can use cash accounting and record transactions when they happen, as volumes are small.

For bigger businesses, accrual accounting is essential, as they have high volumes of transactions. With accrual accounting, only the product sold is recorded, rather than payment received for the product. Similarly, an expense is recorded when a bill is received rather than when an invoice is paid.

4. Store receipts

Storing receipts is essential, as they are proof of business expenses made. You can store receipts by scanning them, taking photos, and keeping digital copies.

5. Regularly manage and record expenses

It's important to track spending and categorize them accordingly. Examine every transaction to compare these business expenses to your revenue.

6. Consider subscribing to an expense software

For some businesses, it is worth looking into expense management software to automate the process of tracking, managing, and recording expenses.

Tracking business expenses with Pluto

If you choose to go for an expense management software, it will help you automate the tracking, managing, and recording of expenses. But Pluto's expense management software offers more than just tracking, managing, and recording your business expenses.

Pluto will keep detailed records of all your expenses, reduce your taxable income, and help you if you are audited or need to reconcile accounts.

With Pluto, you'll be able to do the following:

Store receipts

• Upload your receipt through Whatsapp or the Pluto app as soon as a business expense is made
• Store all digital receipts on Pluto's software

Record business expenses

• All transactions are recorded on the software automatically when using Pluto corporate cards
• Petty cash is automated, meaning expenses are recorded on the spot
• If an expense is made using an employee's personal card, the expense is recorded automatically as soon as they file for a reimbursement

Track business expenses

• All business expenses made by employees can be tracked through Pluto's dashboard
• Daily, weekly, or monthly expense reports are available in real-time

Accounting integrations

• Pluto integrates with all major accounting platforms

Auto-categorization

• All expenses recorded are auto-categorized through Pluto's AI technology
• Pluto categories are synced to your GL codes

Create tax codes

• Create and activate tax codes that sync with your accounting platform to mark expenses as tax deductible or not

Business expense FAQs

More often than not, business expenses have many different rules. Here are the commonly asked questions about business expenses:

How do I categorize expenses?

Most accounting software already has business categories incorporated in the software, so you can use them and amend them as needed.

Pluto's expense management software allows integrations with significant accounting platforms and automatically syncs to your GL codes and chart of accounts.

Do fuel costs count as business expenses?

If the fuel cost was made for business purposes, such as travel for a client meeting, then yes, it is counted as a business expense and can be considered tax deductible.

However, driving to and from work is rarely considered a business expense.

Can business expenses be carried forward?

The UAE corporate tax law details report still hasn't come out yet. We will update this question once the Federal Tax Authority shares more details in the UAE.

Is personal expenses tax deductible?

No. Personal expenses are not tax deductible.

Is my rent deductible if I am self-employed and my home is my office?

In some cases, yes, it is possible if you are self-employed, but only a certain percentage of your rent will be considered a business expense, for example, 25% of your rent.

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