The payment was made with a company card, the money came out of the company account, and it shows up on the statement. So, we can record it as an expense, right?

This is one of the most confusing issues in practice. However, money leaving the company and that amount being accepted as an expense in tax calculations are not the same thing. There are factors that need to be considered, such as the purpose of the expenditure, its documentation, who it was for, and the period to which it relates.

When this distinction isn't made within a business, a credit card statement is sent to accounting at the end of the month, and all transactions are expected to be expensed. Payments without invoices, restaurant expenses without explanation, employee advances, and partners' personal purchases are all grouped together in the same file.

My approach to this is: Accounting shouldn't have to guess what the company's money is being spent on. A simple system in place when expenses are being made will prevent many problems later on.

First, let's separate the payment, the document, and the expense.

Bank statements or credit card statements primarily show the payment transaction. Invoices and other documents appropriate to the nature of the transaction reveal the goods or services purchased. Whether the expenditure can be deducted from the tax base depends on these documents, as well as its relationship to commercial activity and any specific restrictions.

Therefore, we conduct three separate assessments:

• Has the money actually been paid?

• Can the transaction be explained with appropriate documentation?

• Can this expense be taken into account in the company's tax calculations?

An invoice for a computer purchased in the company's name may exist, and the cost may have been paid using the company's credit card. However, this does not automatically mean the computer's cost will be recorded as an expense for that month. Depending on the nature of the transaction, asset registration and depreciation assessment may be required. Similarly, with annual software subscriptions, the month of payment and the period to which the service relates may not be the same.

Not every payment is an expense; and not every amount classified as an expense has the same tax implications.

Tax-Deductible Expenses in Company Expenditures

So, which company expenses are deductible for tax purposes? We can't answer this question simply by looking at the existence of an invoice. First, we need to determine under which legal regulation the expense is deductible.

According to Article 6 of the Corporate Tax Law No. 5520, corporate tax is calculated on net corporate profit. The same article states that the provisions of the Income Tax Law relating to commercial income shall apply in determining this profit. Therefore, when evaluating company expenses , Article 8 of the Corporate Tax Law and Article 40 of the Income Tax Law are considered together.

One of the fundamental provisions in Article 40 of the Income Tax Law is the deduction of general expenses incurred for the purpose of generating and maintaining commercial income. Business expenses such as rent, electricity, communication, accounting, consulting, and similar operating expenses can be considered within this scope if certain conditions are met. The determining factor here is the existence of a verifiable link between the expense and the company's commercial activity.

The same article also regulates topics such as business-related travel and accommodation expenses, expenses for vehicles used in the business, and depreciation allocated in accordance with the legislation. However, these expenses have their own conditions and limitations. For example, the duration and scope of business travel must be compatible with the work being performed; the relevant restrictions must also apply to passenger car expenses.

Article 8 of the Corporate Tax Law (KVK) regulates deductible expenses for corporations. Regarding non-deductible expenses, Article 11 of the KVK and other relevant limitations should be reviewed.

Therefore, when evaluating expenses, we should ask the following questions together:

• Is the expenditure related to the company's business activities?

• Is it supported by appropriate documentation?

• Is it being recorded for the correct period and to the correct account?

• Are there any prohibitions, limits, or special conditions in the legislation regarding this expenditure?

An invoice is proof of expenditure. Whether an invoice can be accepted as an expense for tax purposes depends on the nature of the expenditure and the relevant legal provisions. Simply stating "we received an invoice in the company's name" without establishing this distinction is incomplete.

Card slips, cash register receipts, and invoices are not the same document.

We can call any piece of paper given after paying at a restaurant a "receipt." However, a bank POS slip and a financial sales document are different. A slip that only shows a card payment is not equivalent to an invoice on its own.

There's an important detail here: some documents issued by new generation cash registers include both a sales receipt and a bank slip. Therefore, it's necessary to look not only at the document's appearance but also at the financial information it contains.

It would also be incorrect to say, "Invoices are absolutely necessary for company expenses; no receipts are accepted." For purchases of stationery, office supplies, and cleaning materials used and consumed in the workplace, retail sales receipts or cash register receipts can be accepted as expense documents, provided they meet the relevant conditions and invoice issuance limits. However, this possibility cannot be extended to every purchase. For purchases of goods and services that are subject to resale, an invoice is required regardless of the price.

For example, cleaning supplies used in the office are not evaluated the same way as products purchased to be sold to a customer. My most practical suggestion is to have the company's name, tax number, and address ready during the purchasing process; and to ensure the invoice is correctly prepared from the start for transactions requiring it. Trying to correct an invoice issued in the wrong company's name at the end of the month will take more time than spending two minutes during the purchasing process.

Receiving an invoice in the company's name does not turn a personal expense into a commercial expense.

It's important that an invoice is issued in the company's name. However, that alone isn't sufficient. A partner's family vacation, home furnishings, or unrelated personal purchases don't automatically become business expenses simply because they're paid with a company card. The same applies to an employee's personal expenses. First, the true nature of the payment must be determined: Is it an amount to be reimbursed, a payment to be offset against a company debt, or a benefit provided to the employee? The accounting and tax implications will vary accordingly. In the case of employee benefits, the wage and payroll aspects may also need to be considered.

Especially in limited and joint-stock companies, company funds and partner funds should be tracked separately. In transactions where company resources are used by a partner, arm's-length interest rates, transfer pricing, and taxes related to the financing transaction should be evaluated separately according to the terms. The statement "The company is already mine" does not automatically classify every expenditure from the company account as a company expense.

Why is the approach of "There's no document, we'll just write KKEG and move on" incomplete?

Legally non-deductible expenses (KKEG) refer to expenses that are not accepted as deductions in the calculation of the tax base. However, not every undocumented payment automatically falls under this category. First, it is necessary to determine whether the expense actually belongs to the company. A personal payment to be collected from an employee is not the same as an expense determined to belong to the company but which does not meet the tax requirements.

Furthermore, the fact that an amount is not deducted in the tax calculation does not automatically eliminate the deficiency in the obligations of obtaining and issuing documents. Managerial approval or expense forms prepared within the company do not substitute for the necessary financial document. The VAT side must also be checked separately. For expenses related to personal consumption or non-business activities, the fact that VAT is shown on the invoice does not grant the right to deduct it. Regarding VAT on non-deductible expenses, the rules and special exceptions in the law must also be considered. Article 228 of the Tax Procedure Law contains limited exceptions regarding the obligation to provide documentation. However, the explanation "I lost the receipt" or "I forgot to ask for an invoice" alone does not guarantee the benefit of these exceptions. If the document is lost, the first step is to try to obtain a copy of the document or an electronic document of the same transaction from the seller. Having a second invoice issued as if a resale had been made for the same transaction is not the correct solution.

Not every advance given to an employee is a staff advance.

The money given to an employee for visiting clients or making purchases on behalf of the company is different from the money given as part of their salary.

The choice of account depends not on whether the recipient is an employee, but on the purpose of the payment. The nature of the transaction is also evaluated separately for travel expenses and other types of advances.

For example, let's say an employee is given 20,000 TL for a company trip. If the accepted expense documents at the end of the trip show a total of 16,500 TL, the remaining 3,500 TL is refunded to close the advance. If the accepted expenses exceed the advance, the difference is paid to the employee after the approval process. Expensing the entire 20,000 TL at the time the advance is given, before any finalized expense has been recorded, can create an expense entry. When the documents arrive, the amounts should be transferred to the relevant expense, cost, or asset accounts. An advance that remains open for months does not automatically become a wage or joint debt. However, the reason for its non-closure should be investigated, and the transaction should be processed according to its true nature. The fact that the account name is "advance" does not prove that the money in it is actually a business advance.

What do we do when the employee pays with their own card?

An employee paying for a company expense with their own card does not automatically reject the transaction. The expense must be company-related, properly documented, and the payment relationship traceable. In transactions where the invoice should be issued in the company's name, the document must be obtained in the company's name; the employee's payment must be linked to the expense form and, if necessary, the payment record. Any reimbursement from the company to the employee must also be linked to the same expense.

One of the most common mistakes is recording the invoice as an expense and then expenseing the reimbursement to the employee a second time. However, a reimbursement is the settlement of a debt arising from a previously recorded expenditure. The same principle applies to company credit cards: the purchase record and the payment of the card debt are not two separate expenses. In installment purchases, each installment does not create a new expense; the goods or services purchased are recorded according to their nature, and the installments are tracked in a payment schedule.

Disclosure is important for travel, customer meals, and digital subscriptions.

Sometimes, simply stating "client dinner" is considered sufficient. However, if the purpose of the meeting, the client or project it's related to, and the attendees aren't specified, establishing a business connection becomes difficult later. A lengthy report isn't necessary. A short, concrete statement like, "Meeting with two company representatives as part of X company's proposal negotiations," is often more effective. The purpose of the expense should be clear without gathering unnecessary personal information. Similarly, travel dates, routes, and business purposes should be documented. Personal vacation days or expenses for family members added to business travel should be separated. If per diem allowances are applied, they should be considered alongside actual expense payments; double reimbursement of the same expense should be avoided, and the conditions for exemption from per diem allowances should be checked.

For foreign software, advertising, and digital services, simply seeing the company name on the card statement is not sufficient. The seller's documentation, subscription period, the company using the service, and the purpose of use must be included in the file. For services utilized in Turkey, VAT may be applicable as the responsible party. In withholding tax assessments, the nature of the service, the seller's status, and the relevant double taxation avoidance agreement are taken into account. Applying the same rate to every foreign payment is not correct.

Expense forms do not generate documents; they make documents explainable.

The purpose of the expense form is to establish the link between the payment and the document. It should include at a minimum the person making the expenditure, the date, the business purpose, the document number, the amount, the payment method, the relevant project or department, and approval information. I suggest adding another field: “Has this amount been previously paid by advance, company card, or other method?” This question helps prevent a second payment for the same document. The manager confirms the necessity of the expenditure and its compliance with the budget. Accounting, on the other hand, checks the document, account selection, and tax application. These two checks are not interchangeable. The internal company deadline should also be clear. For example, it could be agreed that the expense form be completed within five business days of the return from travel. This is an operational rule for the company; it is not a substitute for legal document and record-keeping deadlines.

Let's protect the document while setting up the digital system.

Initially, a standard form, an organized document folder, and a transaction-based tracking table may suffice. The important thing is that the document can be found, matches the relevant payment, and that it shows who approved it. However, taking a photo of a receipt is not the same as creating a legal archive. Original paper documents and the original files where electronic documents should be stored must be protected according to their own preservation and presentation rules. For electronic documents, an archiving system based solely on collecting images or printouts should not suffice. Document collection software or artificial intelligence can speed up this process. It can read the date and amount from the invoice, match it with the statement, and flag duplicate documents. However, it would not be correct to expect it to determine the commercial purpose and tax implications of the expenditure on its own.

Don't just look at the total amount on your statement at the end of the month.

The monthly review should include pending transactions, outstanding advances, personal expenses, returns, cancellations, and duplicate entries. When the cost of a returned product is refunded to the card, the purchase record and related VAT transactions must also be corrected as needed.

Expenses such as passenger car purchases, fixed asset acquisitions, and subscriptions spread over periods require special evaluation and should be checked separately. For businesses conducting R&D, technology park, or support projects, it is crucial to link the expense to the correct project. A payment that is considered an expense for tax purposes may not be considered an eligible expenditure in the relevant support program. Not every business needs to purchase expensive expense management software. However, every business needs a system where the spender submits the documentation, the manager approves the purpose, and the accounting department can verify the transaction.

My suggestion is not to try to establish this system after the company has grown. A habit that isn't applied today for ten transactions is much harder to implement tomorrow when there are a hundred transactions.

Every expenditure from the company must have an explanation. The amount to be expensed must also have appropriate documentation and a commercial justification supporting this explanation. Otherwise, in a potential sectoral audit, even if nothing else is found, and even if tax assessments cannot be made solely on these points, special penalties for irregularities may be imposed. It should be remembered that every outflow from the company's cash reserves represents a reduction in working capital.