What is a Per Diem?
Per diem, or "for each day" in Latin, is a set amount of money that an organization gives an employee each day to cover expenses while traveling for business.
A per diem allowance is paid for expenses that extend beyond the normal course of daily activity.
Per diem is the rate of pay that an employee receives for each day that they are away from their regular place of work.
The per diem rate is usually determined using the employee’s gross income, which is earned from salary, commissions, tips, or other methods of earning income. Per diem is based on a percentage of the salary or wage paid per day, so it is a reimbursement that is usually small.
What Is Business Travel Per Diem?
A business travel per diem goes by many different names, including business meal expenses, business entertainment expenses, and expenses for business travel.
A business travel per diem is a set amount of reimbursed funds that reimburses for expenses (such as meals, lodging, and entertainment) that are required for a business trip.
The per diem amount may cover business meals, business entertainment, or both. If the per diem covers both meals and entertainment, then the meal reimbursement is more commonly referred to as the “meal allowance”.
Why is Per Diem necessary?
Per Diem is a necessary evil because it helps to ensure that employees are fairly compensated for the work that they do. Per Diem also allows employers to keep track of how much each employee is spending on business related expenses.