Business Spending Account (BSA) overview
A Business Spending Account enables employees to access funds for work-related expenses, simplifying expense management and reducing traditional reimbursement needs. This guide provides you with a detailed overview of how the BSA works so you can support employees in utilizing their benefits effectively.
What’s covered?
Each company defines its specific BSA coverage, but common categories include:
- Office supplies and equipment: Items such as computer accessories, office supplies, and work software.
- Communication and technology: Business-related phone, internet, and data plans, along with industry-specific tools.
Level provides an intake form during onboarding for your selected plans, which include an exhaustive list of all eligible coverage categories for the selected plan. Please feel free to reach out to your account manager or success@level.com to request our intake form for your review and plan configuration.
Employee eligibility
Eligibility criteria are set by your company, and specifics can vary depending on job roles or other company-defined factors.
Auto-enrollment
Automatically enrolls members based on plan enrollment criteria (e.g. employee type, status, location) without a required election by the employee.
This enrollment type is most popular for Business Spending Accounts, but check out our Enrollment article for more options.
Taxation information
BSAs are generally tax-free if used exclusively for legitimate business expenses. Here’s what to keep in mind:
- Tax-Free Reimbursements: Typically, these expenses are tax-free when appropriately documented.
- Documentation: To maintain tax-free status, receipts are usually required.
- Employer’s Responsibility: As an employer, maintaining accurate records of business expenses is essential for compliance.
For specific details, consider consulting with your company’s finance team or a tax professional to ensure compliance with relevant tax laws.
Termination
When an employee departs, BSA funds are managed according to company policy. Please review your organization’s guidelines regarding BSA balances upon termination, and ensure this information is clear to employees before they exit. The specific treatment may vary, so it’s essential to confirm the company’s stance and communicate it to departing employees if needed. All terminated employees will continue to have access to their Level account only to review past transactions and expenses.