The Ultimate Guide to Cell Phone Reimbursement Stipends
Is your team using email, Slack, or work-related texts on their phone? Then you need a reimbursement plan.
According to the Oxford Economics survey, conducted in 2018, 89% of organizations provide a full or partial stipend to compensate "bring your own device" (BYOD) employees for their mobile phone expenses.
With such a large percentage of organizations offering this type of perk, that's why we developed this guide to everything you need to know about cell phone reimbursement stipends.
A cell phone reimbursement stipend is a sum of money given to employees for them to purchase on their cell phone plans.
Further details on what they are:
Stipends are often given out monthly.
It is a non-taxable benefit! Make it a great one for the organization or employees, whomever would cover the taxes.
"Cell Phone Reimbursement Stipend"
VS "A Work-Support Perk Stipend"
When most people think about covering their team member's work-related expenses, they stop at cell phones. However, in today's world people are not only using their cell phone for work but they're often spending personal money on work-related expenses such as noise-canceling headphones, ergonomic mouses, monitors, internet bills (especially for those who are remote), software, and more.
Many of today's culture-forward companies are going beyond the traditional cell phone reimbursement model and are considering what other ways they can support their employees at work through a work perk stipend.
The benefit of doing the work perk stipend model is that you're able to cover the same amount of money for your employees, but give them more options and control over what they spend that stipend on. That way you're giving them the choice of covering their cell phone, but in addition to any other work-preference related expenses they incur.
Below is a graphic highlighting the two programs you can develop with $100/month.
Throughout this guide, we'll be discussing both types of stipends.
Three Examples of Cell Phone Reimbursement Stipends
When setting up a cell phone program, there are two approaches. You can set up a stipend to reimburse your team for cell phone plans, or you can create a broader program which includes cell phones as well as other categories related to work.
Below are examples highlighting the two unique approaches.
They provide one stipend for their team:
$600/quarterly to spend on cell phone or health and wellness
2. Buffer, a fully-remote company.
Buffer offers several work-perk stipends:
$200/month for "Working Smarter" stipend for coffee shop working purchases
Covering your team's cell phone bill is an especially good idea when team members use their personal cell phones:
to make work calls.
check and respond to email
be accessible via Slack, MS teams, or whatever internal chat system you use
If your team members are expected to work long hours and be accessible during off hours, covering their cell phone is an excellent work perk.
A few of the benefits:
This is a taxable benefit you can offer your employees
When done through an expense software like Concur or a perk management software like Compt, they are scalable benefits, and also 100% IRS compliant.
If you do a work perk stipend and allow your employees to spend in several work-related categories, they get a broader base of necessary perks. They also spend more mindfully. Instead of requesting perks willy nilly, people are more thoughtful about what they spend their money on.
Learn Even More About the Benefits of Perk Allowances & Lifestyle Spending Accounts
Download the free eBook to find out why perk stipends and lifestyle spending accounts have become the most common new perk.
If you're planning to buy the cell phones, the plans, and distribute them to your team, that's COPE. BYOD is your go-to plan if you're reimbursing all or some of your employees' cell phone plan.
To decide between the two, you have to determine what matters most to your company. If security is a big concern or being able to track the location of your employees -- then COPE is likely the right path for you. Be careful though because it's important to realize that with the COPE approach, you're going to manage the cell phone devices, plans, bills and everything else that comes with owning a cell phone (or hundreds of them) which can take a lot of work.
As the Abacus blog points out, "BYOD is a more scalable, affordable, employee-oriented policy than COPE." Plus, most people don't want to carry around two phones, scoring another point for BYOD and its practicality.
Options for Cell Phone Stipends or Perk Allowances:
For the longest time a simple reimbursement model was the only option available, but that's not true anymore. Below are some options you have for offering your employees a cell phone reimbursement stipend:
Give employees a specific amount every month, reimburse through an expense software.
Give employees a 'cell phone perk stipend,' reimbursed through a perk software (like Compt). This is different to the option above because it highlights the cell phone stipend as a perk, not a business expense which you are expected to cover.
Give employees a 'work perk stipend' or a 'productivity and tech perk stipend' where employees can have their cell phones reimbursed as well as hardware like mouses or monitors, software, and anything else hat helps them be more successful at their job. If you choose this option, this type of perk stipend would be comprised of some taxable and nontaxable items.
If you're looking to offer these as a business expense, choose a business expense software like Concur or Expensify.
However, if these are part of a perks program that you offer above and beyond salary, then a perk management software like Compt is best. If you decide on a perk stipend software double-check that the software you select can accommodate the various cell phone providers that your employees will be using. Otherwise, if it's limited to vendors some of your team will be left out defeating the purpose of the program in the first place.
How to Set Up a Cell Phone stipend:
1. First determine how much you want to offer your team members, within what timeframe.
Most companies offer cell phone stipends on a monthly basis, but you can do quarterly or annual -- whatever is best for you situation and team. Then determine how much. According Abacus' How to Create a Cell Phone Reimbursement Policy, they suggest "$50 for low business use and $75 for high business use."
2. Secondly, select your perk spending categories.
Next decide, if you're doing a cell phone reimbursement spending option only, or if you're creating a larger, more comprehensive program around all-work related expenses. The latter is considered more akin to a perk program and would include items like hardware, home internet bills (especially great for those who are remote), software, and anything else that helps them to enhance their work abilities and experience.
3. Once you have this information determined, now it’s time to decide how you’ll manage the process.
Your options include:
Managing the manually.
If you choose this option, be prepared to set up a process to track purchases, receipts, balances, approval and paid perks, as well as rejections or ones which need further review. Consider using Google forms to track submissions, excel or Google sheets to track progress, and be sure to create a process to track the nontaxable vs taxable (for IRS compliance).
Choose a software to help you manage this.
Concur and Expensify are two of the most well known choices for business reimbursements. If you decide however to extend the program to be more than just a cell-phone reimbursement program and include all types of work-related perks, a perk management software like Compt can help. Compt is 100% IRS compliant, can manage your other perk stipends, and streamlines the entire process which makes you and your finance team's job much, much easier. Plus, with Compt you don't have to pay each expense report like expense software, but rather pay monthly amount based on the number of team members which can lead to a lower total price.
Want to learn more about Compt?
We help companies build, streamline, and scale their taxable and nontaxable employee perk allowances. You get all of the personalization, without any of the headache of managing them.
Our customers are innovative, thought-leaders. Here are a few quotes on what they have to say about us:
"We had 330 perk receipts submitted in the month of June. Just imagine if we tried to do this manually or use an expense software, then it would be going through finance, cost more money, and it also wouldn’t be an accurate line item. It’s just much easier to manage this way." Heather Doshay, Webfow. (Check out their case study here)
And below is a piece of (unsolicited) feedback we received from a customer of ours, Josie Joling.