Per diems are a simplified way of accounting for certain travel expenses. Many companies, especially consulting, staffing, and temporary firms, either don't understand or just don't want to hassle with the proper way to handle per diems. They often oversimplify by designating part of an hourly pay rate as per diems - but this is seriously wrong and could get them in big trouble with the IRS. Even if it usually comes out within the limits, it doesn't qualify.
As thoroughly covered in the free IRS Publication 463 on Travel Expenses, per diem literally means per day and must be calculated per day, not per hour or per mile. Also it is for each day the worker is away from home on business, not just days worked, so you must also include weekends and holidays if the worker is still away from home. The per diem is a specified amount for each day regardless of how many hours are worked that day, even if none. Special rules apply for the days of leaving home and returning home. Therefore, the total per diem, like most other travel expenses, cannot be known until after the trip.
Most people only use Method 1 to look up the maximum legal per diem rate, and don't even know about Method 2 which is much simpler and quite often gives a higher rate. There are other rules and restrictions as well. Many companies have decided that doing it right would be so complicated that they don't pay per diems at all, just to play it safe, but this wastes up to $50K/year or more per person. We know how to do per diems right so you can safely maximize the tax savings for your company and your people without breaking the rules.
While our service works best for you when you have us completely take care of paying your contractors (and, optionally, your employees), if for some reason you don't want to do that, you can still use our per diem handling service. Just pay your people a small amount each (like $10/hr.) the way you normally pay them, and let us handle the rest. Out of that, we'll calculate the correct amount of per diems and other deductible expense reimbursements, and pay your people accordingly. You and your people will save money, depending on the numbers, but more importantly, you can be sure that the per diems are being handled correctly.
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Let us handle your per diems and other deductible expense reimbursements for you.