The unfortunate reality when needing to relocate an employee is that there is no way to know what they will use the money towards. Will they spend it on what they need to, or will they spend recklessly? There is, however, a solution to this: hiring an experienced relocation company.
There are many benefits to hiring an experienced relocation company. One of the benefits is that relocation companies provide the relocating employee with the information directly to avoid being confused and eliminates any other parties from being involved. This can rid the relocating employee of any panic or unease which can result in less chance of sporadic and poor spending choices.
An experienced relocation company which provides an Expense Management program can move the relocation process along faster and reduce additional internal administrative efforts. In relation to Expense Management, relocation providers will also assist with Policy Development, Budget Preparation, and Cost Of Living Analysis. The implementation of an Expense Management Program is essential to successful lump sum relocation.
Expense Management Program
An Expense Management Program is a program that consists of processing and reimbursing employee expenses, tracking expenses by expense category, and completing a year-end analysis. It also allows for accrual at the end of the fiscal year and issuance to payroll at the end of the year for any taxable reimbursements.
Another benefit of hiring a relocation company is the specialists’ knowledge on taxable benefits. Any lump sum that an employee receives is taxed as income. This means that the employee is only able to use between 50-75% of this lump sum towards their relocation expense. An expense management program, however, allows for the corporation to pay for allowable expenses and greatly reduces the tax burden on the employee. While it may cost a small fee to execute an expense management program it’s cost benefits far supersede its small cost. For example if your employee is in a higher tax bracket, up to 50% of their relocation allowance could be taxed at source without proper guidance.
Benefits to the Corporation
- Exceptions fielded by the Relocation Consultant
- Outsourcing expenses is cost-effective to the corporation
- Able to view online expenses, run reports and receive accrual reports
- Covered relocation costs are identified and employee given current advice on CRA rulings
- Knowledge of taxable benefits
Benefits to the Employee
- Easy and fast reimbursement by direct deposit
- Expert advice on how to allocate available dollars within CRA guidelines
- Employees submit expense reports on-line and is able to view acceptance of expense
- Knowledge of taxable benefits
The best way to solve the woes that present themselves during a lump sum employee relocation is to hire a relocation company that will implement an Expense Management Program. This program will help ease your mind, as well as the relocating employees mind, all while keeping the relocation on track, and on budget!
If you are relocating an employee and are searching for a relocation company to handle your lump sum relocation money, TransferEASE can help. At TransferEASE our knowledgeable relocation experts can help guide your relocation from start to finish, with care and attention. Call us today to speak to a representative.