How To Categorize Team Building Expenses

November 15, 2022

As a leader, you will spend a lot of time working with your team members. You will need to motivate them, inspire them, and challenge them at times. This is what makes being an effective leader difficult at times.

As a manager, there are always things that can get in the way of teamwork. The most common areas where this happens include:

Lack of communication

Unclear responsibilities

Conflict over goals

General indifference or lack of interest in others’ success

It is very important to address these issues if they arise, but it can be tricky to do so without first categorizing team building expenses.

That is why we have written a short article for you about how to categorize team building expenses. Read on to find out more!


The content in this article should not be used as guidance towards whether or not teambuilding events are necessary. Only determine that by looking at your organization’s budget and determining if those costs are justified. We also cannot guarantee the effectiveness of any event unless you send enough resources to ensure maximum impact.

Furthermore, we are not experts in organizational psychology. Nor are we professionals in leadership. We hope our article has inspired you to look into the area a little bit though.

Teambuilding Is A Viable Budget Category

Many organizations classify attending a conference or running a group exercise as “business travel” or “work-related activity.

Examples of team building

how to categorize team building expenses

Teams organize competitions or exercises to challenge each other’s skills, motivate others to do better, and promote teamwork. These activities are often called “teambuilding events” because they strengthen groups by breaking down barriers and promoting trust.

Competitions can be informal — like having a trivia night at your local bar where everyone brings their favorite drink and someone wins prize for knowing the most about it. More formal ones have prizes that reward specific things (like winning a trip to a certain place) or pay a cash award per person attended (such as an employee picnic).

Teambuilding events can occur monthly, yearly, or even every few months depending on the organization. Some only happen once a year while some keep happening throughout the year.

Lessons learned

how to categorize team building expenses

As mentioned earlier, categorizing team building activities can be tricky. While some companies may consider spending 10k on an event as business related, most do not.

Events that are considered non-business expenses are things like registering at a conference or buying lunch for your department. Technically these costs should be reclassified as personal, but many people in the company may see it differently.

Because of this, you will probably have to do some extra research to determine if an activity is categorized as business or personal.

You could ask around and get opinions, but make sure to only trust very trustworthy sources!

Another way to find out if an event is classified as business or personal is by looking back at past events. If you notice lots of employees attending then they likely viewed it as business related, even if it was marketed as casual.

Equipment used

how to categorize team building expenses

The next thing you will want to do is determine what types of equipment you need to use for team building activities. This includes anything from going out for lunch or drinks as a group, doing activity-focused exercises, attending events, practicing using the organization’s software, and more.

You can include this cost in your overall business overhead if it is considered research or development related. Some companies even have a budget category for this!

Researching how to run an efficient organization takes time so consider these costs part of that investment.

However, don’t overbill your expenses. Make sure to keep track of what you pay for and what you are reimbursed for so you know where your money goes.

General rules about categorizing team building expenses: only include items that clearly relate to the company’s mission, they must be necessary for the job, and they must be reasonable amounts.

If you spend $1,000 at an event that is not held by the company, its organizers, or is not needed for the employee’s work, then that isn’t appropriate. You could also find yourself being asked to prove the expense was for professional development when it wasn’t.

Tips for team building

how to categorize team building expenses

As mentioned before, spending money on team building is not cheap! It can easily add up quickly unless you have organized it properly.

The most important thing to remember about organizing your budget is to separate business related expenses from personal ones. This will help make sure that your career does not suffer due to lower income levels or limited budgets.

Business related expenses should be categorized as professional development (PD) costs, marketing and advertising costs, and direct service provider fees. These are all essential parts of running a successful business.

Personal savings should include things like transportation, food, and entertainment. These are all very necessary parts of being an adult, so leaving them out of the budget is not smart.

Design your team building event

how to categorize team building expenses

A great way to organize a team building activity is to use a system that allows you to easily categorize the costs. This makes it easy to keep track of what items costed how much and for which category they fit.

It also helps in creating a more efficient process since you can now sort all of the expenses by cost category instead of having to remember what each item cost individually. has some very helpful tips for organizing and categorizing team building events.

Create a budget

Budgeting is an essential part of any large-scale team building or leadership training event. You can never organize a meeting, go on a vacation, or do anything else if you don’t have enough money!

A budget should include both internal and external costs. Internal costs are ones that come from your organization, such as payroll, office supplies, and marketing materials. External costs are things that you pay outside your company, like hotel rooms or flights.

You must also consider how much money you will need to spend on food, drinks, and transportation to and from the event. These “wastage” expenses are not included in the budget per se, but they can add up quickly when you're talking about a group of people.

Most organizers offer discount tickets or special services for groups, so make use of them! Not only does this save you money, it gives you more incentive to succeed because you get some discounts. And successful teams exist and thrive on motivation.

Track your spending

how to categorize team building expenses

It’s very difficult to organize a team building event if you don’t have adequate funding. Unfortunately, many people start organizing events without first tracking their expenses!

This is an expensive mistake that can cost your organization money in the long run. You should always keep track of what you spend so that you do not overspend.

You will also want to make sure that you are within budget so that you do not overextend yourself financially.

It’s important to remember that even though it may feel good to spend money, you should never pay more than you have budgeted for.

Link team building to business outcomes

how to categorize team building expenses

As mentioned before, linking team-building activities to business outcomes is the best way to ensure that your organization is investing in these experiences for the right reasons. If you’re looking to boost employee engagement or motivation, consider how to incentivize participation in team events.

If you want to promote teamwork, invest in time off as a group. This can be taking a day off work together, holding an internal event, or organizing a trip outside of the office!

As we know, spending money to enjoy yourself is great, but only if it transfers into other behaviors. By having direct benefits like trips, drinks, or meals, people will feel obligated to keep funding these experiences because they’ve already been paid for.

By instead offering educational seminars at cost, or free snacks and beverages during the workplace movie night, this kind of transfer happens more naturally. These are strategies many large companies use to avoid costs being categorized as entertainment.

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