Building an Expense Approval Workflow for a Team of Five

In a five-person company, an expense approval workflow is not about hierarchy. It is about making sure that no single person controls a dollar from the moment it is requested to the moment it leaves the bank account. That is the whole design goal, and once you hold onto it the rest of the decisions - who approves what, what needs permission first, how long people have to submit - get much easier to make.

Most small-team processes fail for the opposite reason you would expect. They are not too loose, they are too elaborate: a three-stage sign-off chain invented for a company of two hundred, applied to a company where everyone eats lunch together. Nobody follows it, and within a quarter you have no process at all.

The 60-second version

One approver per person, and never yourself. Every claim needs one set of eyes that did not spend the money. Two approvers on a $40 lunch is theatre.
Pre-approval is for money you would want to refuse. Set the threshold where an unbudgeted purchase would actually hurt, not at a round number.
With three people, split the three actions, not the org chart. Requesting, approving, and paying should not all land on one person.
The owner still submits. Personal spend run through a corporation can be assessed as a shareholder benefit under s. 15(1) of the Income Tax Act [3].
Thirty days is the usual deadline because it keeps claims inside the reporting month. It is a bookkeeping choice, not a legal one.
Approvers check purpose, receipt quality, and tax - not category codes. Coding belongs to the bookkeeping process.

Who should approve what in a small team?

Start by writing down the names. In a five-person company there are usually two or three people who spend money at all: the owner, a salesperson or field technician with a card, and an office manager who buys supplies. Assign each of them one named approver who is not them. That is the whole matrix, and it fits in four lines of a document.

The approver needs two qualities and only two: independence from the claim, and enough context to know whether the spend made sense. A bookkeeper can verify that a receipt is valid but often cannot tell you whether a client dinner was necessary. A sales manager can tell you the dinner was necessary but may not notice the receipt is a card slip. You rarely get both in one person, which is why approval and bookkeeping review are genuinely different steps.

Resist the urge to add a second approver for larger amounts. What larger amounts need is not more signatures, it is earlier ones.

Where should you set a pre-approval threshold?

A pre-approval threshold is the line above which someone asks before spending instead of after. The reason to have one is blunt: after the money is spent, your only options are to reimburse an expense you did not want or to have a fight with an employee. Pre-approval moves the decision to a point where saying no is cheap.

Set the number by asking what size of unexpected purchase would make you rearrange something. For most small Canadian businesses that number is a lot lower than the thresholds you see in corporate templates. Whatever you choose, the rule should be one sentence and admit no ambiguity about who grants the permission or what form it takes. An email or a chat message is fine. What matters is that it exists in writing before the purchase, not that it looks formal.

Two categories usually deserve their own, much lower threshold regardless of amount. The first is anything that creates a recurring charge, because a subscription is not a purchase, it is an annuity you have sold to someone else. The second is anything that becomes a depreciable asset rather than a current expense, since it changes how the cost appears in your return - see our note on capital cost allowance classes for why a $900 laptop and $900 of office supplies behave very differently.

How do you separate duties when there are only three people?

Segregation of duties sounds like an audit concept for companies with departments. The underlying idea is smaller than that: three actions exist around every dollar - requesting it, approving it, and releasing it - and the control comes from no one person holding all three. With three people you can do this. With two, you cannot fully, and you compensate with review after the fact instead.

The practical split in a small Canadian company usually looks like this. Staff request. The owner or a manager approves. The bookkeeper releases payment and records it, and cannot approve. The critical constraint is the last one: whoever touches the bank account should not be able to authorise the thing they are paying. If your bookkeeper both approves expenses and executes payments, you have no control at all, no matter how much you trust them - and trust is not a control, it is the absence of one.

Where the split is genuinely impossible, substitute detection for prevention. A monthly review where a second person reads the full expense register, rather than individual claims, catches most of what a missing approval step would have caught. MapleExpense keeps an audit trail of who entered, edited, and approved each record, which is what makes that monthly read a five-minute job instead of an afternoon of reconstruction.

Who approves the owner's expenses?

This is the question every small business asks last and should ask first, because owner spend is where the money and the tax risk both concentrate.

The honest answer is that in a small corporation nobody has the authority to refuse the owner, and pretending otherwise produces a policy people can see through. What you can do is make owner spend visible and reviewed. The owner submits claims through the same system as everyone else, with the same receipt standard, and the bookkeeper or external accountant reviews them periodically with an explicit mandate to flag anything that looks personal.

The reason is not governance for its own sake. Under s. 15(1) of the Income Tax Act, a benefit conferred on a shareholder is included in that shareholder's income [3]. A personal purchase paid by the corporation is not simply a disallowed deduction; it can also become taxable income in the owner's hands. Where the owner has genuinely used a personal card for business or a corporate card for personal spend, the cleaner route is to run it through the shareholder loan account deliberately rather than to have it discovered later - our guide on shareholder loan accounts and personal credit card purchases covers the mechanics.

Why is 30 days the usual submission deadline?

Thirty days is the standard answer because it is the shortest window that does not routinely punish someone for being on the road. It is a bookkeeping choice, not a statutory one. The Income Tax Act says nothing about when an employee must hand you a receipt. It says a great deal about whether you can support the deduction afterward, and that is the actual driver.

The cost of a long submission window is that your monthly numbers are wrong and you do not know by how much. If claims can arrive ninety days after the fact, every month you close is provisional. A thirty-day rule means that by the time you close a month, the expenses that belong to it are either recorded or nearly so, which is what makes a month-end close checklist worth running at all.

Decide in advance what a late claim means, and be realistic. For most small businesses the answer is that you still pay it - refusing to reimburse an employee for money they spent on your behalf is an employment problem you do not want - but the claim is recorded against the correct period where the books allow, and repeated lateness is handled as a management conversation. A rule you will not enforce is worse than no rule, a point we go into further in why expense policies fail.

What should an approver actually look at?

Four things, in this order.

Business purpose. Would the stated reason survive being read out in a room? Section 18(1)(a) allows a deduction only for outlays made for the purpose of earning income [1], and s. 67 limits it further to amounts that are reasonable in the circumstances [2]. Both tests are applied years later by someone who was not there, which is why the purpose field matters more than approvers think.

Receipt quality. An itemised receipt, not a card terminal slip. The Input Tax Credit Information Regulations scale the required supporting information with the size of the purchase [6], and s. 169(4) of the Excise Tax Act bars the input tax credit entirely if the prescribed information was not obtained before filing [5]. A card slip does not carry it. Our article on what CRA actually requires on a receipt sets out the tiers.

Tax shown. The GST/HST on the claim should match what is on the receipt, including the supplier's registration number where the amount requires it.

Reasonableness of amount. Not a line-by-line audit. A sanity check that the number fits the purchase.

Notice what is not on the list: choosing the expense category. Approvers get coding wrong constantly because they are thinking about whether the spend was justified, not about which account it lands in. MapleExpense reads the vendor, date, total, and tax off the receipt and proposes the category and GIFI mapping, so the approver decides the question only they can answer and the coding is handled by the system and corrected once rather than argued about every month.

How do you write this down without creating bureaucracy?

One page. Names of approvers. The pre-approval threshold and how permission is given. The submission deadline. What a receipt must show. A short list of what is never reimbursed. A line on who reviews the owner's claims and how often.

Then set the system to match the page, because a policy that lives only in a document is a policy that gets enforced when someone remembers it. Where the rule is mechanical - a deadline, a receipt requirement, a category that always needs a note - it belongs in the workflow rules rather than in a human's memory. The parts that need judgement are the parts you keep for people. That division is the difference between a process that is still running in a year and a document nobody has opened since the day it was written.

If your team carries company cards, read this alongside corporate cards and spend controls: cards move the problem from reimbursement to authorisation.

Frequently asked questions

Who should approve expenses in a five-person company?

In a five-person company, each person's expenses should be approved by someone who is not that person and who has enough context to know whether the spend was necessary. In practice that usually means one manager or the owner approves staff claims, and the owner's own claims are reviewed by the bookkeeper or external accountant. The approver does not need to be senior. They need to be independent of the claim and able to say no.

What is a pre-approval threshold?

A pre-approval threshold is a dollar amount above which an employee must get permission before spending, rather than after. Below the threshold, the employee spends and submits a receipt. Above it, they ask first. The threshold should be set at the point where an unbudgeted purchase would actually hurt cash flow or where you would want the chance to say no, not at an arbitrary round number. Most small Canadian businesses set one threshold for routine spend and a second, much higher one for anything that creates a capital asset or a recurring subscription.

Can the owner approve their own expenses?

The owner can approve their own expenses, but nobody else should be the only check on them. Owner spend is where the highest tax risk sits, because a personal expense run through the corporation can be assessed as a shareholder benefit under section 15(1) of the Income Tax Act and added to the owner's personal income. The practical answer for a small company is that the owner still submits claims through the same system, and the bookkeeper or external accountant reviews them on a periodic basis with authority to flag anything that looks personal.

How long should employees have to submit an expense claim?

Thirty days from the date of the expense is the common deadline in Canadian small business expense policies. It is short enough that the claim still lands inside the same reporting month or the one after it, so your monthly numbers are close to complete, and long enough that a person on the road for two weeks is not automatically late. It is a policy choice, not a legal requirement, but the shorter the window the fewer surprises at year end.

What happens if an employee submits an expense claim late?

A late claim is still a legitimate business expense and you generally still reimburse it, because refusing to pay an employee back for money they spent on the company creates an employment problem, not a tax one. The real cost of a late claim is accounting: if it arrives after the books for that period are closed, it either distorts the current period or forces an adjustment. Handle late claims by paying them and recording them in the period they belong to where possible, and by escalating a pattern of lateness as a management issue rather than a payment dispute.

What should an expense approver actually check?

An approver should check four things: that the expense has a business purpose that would survive being read aloud, that the receipt attached is an itemised receipt rather than a card slip, that the GST/HST shown matches what is being claimed, and that the amount is reasonable for what it bought. Everything else, including category coding and duplicate detection, is better handled by the bookkeeping process than by a human approver reading one claim at a time.

Do we need a written expense policy if we only have five people?

Yes, but it should be one page. A five-person company needs a written policy for the same reason it needs written employment terms: so that the rule exists before the awkward conversation, not after it. The page should name the approver for each person, state the pre-approval threshold, state the submission deadline, list what receipts must show, and state what is never reimbursed. If it runs longer than one page, people will not read it and you will be back to deciding case by case.

Sources cited in this article

Income Tax Act, s. 18(1)(a)
General limitation: an outlay is deductible only to the extent it was made for the purpose of gaining or producing income from the business.
https://laws-lois.justice.gc.ca/eng/acts/i-3.3/section-18.html
Income Tax Act, s. 67
General reasonableness limit on deductible outlays and expenses.
https://laws-lois.justice.gc.ca/eng/acts/i-3.3/section-67.html
Income Tax Act, s. 15(1)
Benefit conferred on a shareholder is included in the shareholder's income; the provision that catches personal spend run through a corporation.
https://laws-lois.justice.gc.ca/eng/acts/i-3.3/section-15.html
Income Tax Act, s. 230
Obligation to keep books and records with supporting documents, and the retention period.
https://laws-lois.justice.gc.ca/eng/acts/i-3.3/section-230.html
Excise Tax Act, s. 169(4)
An input tax credit may not be claimed unless the registrant has obtained the prescribed supporting information before filing.
https://laws-lois.justice.gc.ca/eng/acts/e-15/section-169.html
Input Tax Credit Information (GST/HST) Regulations, SOR/91-45
Sets out what supporting documents must show, scaling the required detail with the size of the purchase.
https://laws-lois.justice.gc.ca/eng/regulations/SOR-91-45/
CRA, Keeping records
CRA guidance on what records a business must keep, in what form, and for how long.
https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/setting-your-business/keeping-records.html
CRA Guide T4130, Employers' Guide - Taxable Benefits and Allowances
Treatment of reimbursements and allowances paid to employees, including when an amount becomes a taxable benefit.
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4130.html

All sources verified 2026-09-23. Spotted a link that has moved? Email [email protected] and we will correct it.