A meal allowance is a daily stipend for food and drink provided to cover costs during business travel or work-related events. For freelancers, understanding this term is key for managing project budgets and expenses.
What is Meal allowance?
A meal allowance, often called a per diem, is a fixed daily amount paid to cover your food and non-alcoholic drink expenses while working away from your usual place of business. It's typically agreed upon in a contract before a project requiring travel begins.
Why is this important?
For freelancers, a meal allowance ensures you are not out-of-pocket for essential costs while working on a client's behalf. It clarifies expense expectations upfront, prevents disputes over receipts, and can be a valuable point of negotiation for contracts involving travel.
How does it work?
You and your client agree on a daily rate in your contract. The allowance is usually paid as a flat sum, regardless of your actual spending. You may receive it as an advance or as a reimbursement with your project invoice, depending on your agreement.
Pros and cons
The pros include predictable coverage and simplified accounting without saving every receipt. The main con is that a low fixed rate may not cover costs in expensive cities. You also need to understand the tax implications, as allowances may be considered taxable income.
Conclusion
A clear meal allowance clause protects both you and your client. Always discuss and document it before starting work. Understanding this term helps you budget accurately and manage your freelance business finances more professionally.
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