Is it OK to charge lunch with co-workers on a company credit card?
Many companies encourage employees to grab lunch together ? just make sure to know your employer's business expense policies
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com. Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.
Some of my co-workers went to lunch together and charged it on the company credit card. Is this misuse of company funds?
Many companies encourage employees to have lunch together in order to build strong relationships.
Charging these meals on the company's card is not unethical or considered misuse of company funds, unless someone submitted a false or misleading expense report or the employer's policy on business expenses doesn't allow it.
Dear Your Business Credit,
I found out one of my co-workers took two other co-workers out to lunch and charged it on her company credit card.
I think this is unethical and reinforced favoritism in the department. However, is it misuse of company funds? – Rebecca
No one likes working in a department where favoritism dictates who gets ahead. However, breaking bread with colleagues is a common business practice – there are even popular business books about this, like “Never Eat Alone” by Keith Ferrazzi – and it’s something that many companies encourage.
I don’t see anything unethical about your colleagues going to lunch on the company dime, unless someone submitted an expense report that falsely described what the charge was for.
See related: 5 business expense card options for employers
Benefits of having lunch with co-workers
It’s very possible that a leader in your department encouraged your co-workers to grab lunch together, so I’d keep that possibility in mind as you consider the situation.
Many companies have to compete hard to attract and hold on to talent in a period of full employment like the one we have now. Having a great culture where employees genuinely enjoy working with their colleagues gives them a recruiting edge. Encouraging employees to get to know each other a little better and talk about projects in an informal way over a meal is often a part of this.
As to whether this is a misuse of company funds, I doubt it, for the reasons I just discussed. This isn’t a case of employees going on a shopping spree in a clothing store at a mall and trying to pass it off as a business expense.
However, just to be on the safe side, it is always best to make sure to know your employer's policy around business expenses, including sharing a meal with colleagues, before charging.
Employee meals and tax deductions
The IRS allows employers to partially deduct some employee meals, so it’s very possible your company will be doing that in the future in this case.
IRS publication 463 covers the topic of meals for clients, customers and employees.
Employers are able to take a partial deduction for these meals if they are either directly related to business or associated, as long as the meals are not lavish.
- In a directly-related meal, the main purpose of the meal was the active conduct of business. A common example would be employees meeting with a client who is signing a contract at the meal.
- In an associated meal, the meal was associated with business but there was no transaction taking place.
It would seem that your colleagues’ lunches fall into the latter category. That is ultimately for your company’s financial team to determine.
Tip: Regardless of your company's policy regarding business lunches, there are certain expenses you should avoid charging on a business card. These include payroll and business trip extras. Read "8 expenses you should never charge on a business credit card" to learn more.
Take advantage of business-lunch opportunities
What I sense from your question is that you feel excluded from conversations with your colleagues that might help you get ahead.
Why not set a goal of reaching out to one colleague a week to invite them to join you for lunch in the company cafeteria or an inexpensive lunch spot, so you’re part of more of these conversations?
See related: Best cards for restaurants
Given the pace of work these days at many companies, there aren’t many opportunities to get to know colleagues during the course of day-to-day work, but if you put your lunchtime to work for you, you’ll be surprised at the relationships you can build.
And even if your bosses and most influential colleagues are not inviting you to lunch, they are likely to notice that other colleagues are joining you. That will signal to them that you are good at building relationships with your peers, and can bode well for your career.
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