Determining Moving Expenses

HR Hat

We sometimes hire people who live out-of-state, and, as part of our offer of employment, include a lump sum moving allowance. We don't pay enough to hire professional movers to make the move, but we do offer an amount to help with moving expenses.

I would like to offer a large enough amount to approximately pay for someone to move themselves. A quick check to rental truck company websites yielded no quick and easy method to compute costs.

How do you determine how much to offer for moving expenses? Any ideas or "formula" for doing this is appreciated. Thanks.

JIm

marc

A few things to consider, since you are trying to cover a "move yourself" situation, why not just ask for the rental truck invoice and gas receipts as a starter?

You will find that distance counts and the East to West moves are generally more expensive than West to East. For some reason, more migration happens East to West so more rental trucks end up in the West and the rental companies add a Drop Off fee or some such.

Will you cover the cost of boxes, moving pads, tie ropes and bunge cords to keep the load from shifiting? How about refrigerator dollies?

Do you cover meal costs and motel/hotel costs?

How about real estate differentials such as the cost of selling a house on one end and buying on the other?

This is just a starter list. Moving reimbursement start at $0.00 and can go way up from there.

E Wart

Depends upon what you consider as "moving expense" Are you talking about renting a Uhaul it and packing, loading and driving yourself or hiring a moving company to pack, load, drive, unload, unpack, etc. Pay mileage to move all cars, hotel rooms and food during the moving expeience, money to compensate the charges for turning on new utilities, closing costs on home, selling costs of old home, the list is endless. This varies drastically depending upon what you want to do. You can just call a Uhaul it and ask them how much to rent a one way truck (give them size) for x number of days. This would be the cheapest.
Most importantly, don't forget that some of these "payments/reimburesments may be taxable income to the employee and some can be a write off expense to the company. Talk with your CPA on this. (If you pay the moving company directly, it isn't.)

E Wart

TN HR

[font size="1" color="#FF0000"]LAST EDITED ON 05-26-05 AT 08:33AM (CST)[/font][br][br]Off the top of my head, I have a suggestion that may work with some tweaking. You could develop a standard matrix that resembles something like this:

-$250 per room.
-Mileage at current IRS guidelines.
-Per diem for EE only based on departing city rates times number of days travel.
-Ditto for lodging.

So, it may break down to this:

$250 x 10 rooms (3/2 home plus garage)= $2,500
40.5 cents x 1000 miles= $405
3 days travel @ $60 per diem= $180.00
2 nights lodging @ $100= $200

Total cost: $3285

The reason I used these examples is because I can tell you I just saw the bill on a relo earlier this year for someone based on these figures. The tab came out to approx. $14K.

So, having said that, you are offering roughly 25% of what it would cost you to help defray their costs. While this seems reasonable to me, I, of course, do not want to make it appear as though I am putting my hands in your pocket.

Good luck.

Gene

LivindonSouth

Depending on the frequency of your company moves, I'd recommend you get a U-Haul corporate account. Then when your company is going to pay for a move, you simply call the corporate number, give them your corporate number, they bring you up on the screen and you give the essential details; name, from, to, what's allowed, etc. They in turn will call you back with pick up point address, charges, etc. Then you tell your guy where to pick up his truck and what you will pay for. The bill comes directly to the company. I've managed one of these programs in a large company and it worked smoothly. Also recommend you allow the employee to present for reimbursement receipts for gas, lodging and meals while in transit.

The last thing an employee involved in a move needs is to have to front the cost of his move and wait for a reimbursement.

pork1

I concurr with LivingOnSouth and add, that we determine the approximate cost of a relo and offer that amount in a cash payment up-front and then deduct from this cash amount all of the receipted cost. We do not allow for the purchase of smoking materials nor alcohol nor illegal drugs. Those are the relo employee expenses.

This cash is in the form of a loan and should the employee fail to show, or leave us prior to two years the employee is contracted to pay back the cost of moving. 1/2 is provided up-front and the rest is paid after the turn in of receipt.

WE give the employee at "our expense in our dedicated motel, the accomodations for 1 week", after that the employee and family are on their own.

PORK

HR Hat

Everyone:

Thank you for your feedback. I appreciate it!

You've given me several ideas to kick around, and I think I'll end up with a more systematic approach to moving expenses.

Thanks again!

Jim

LivindonSouth

And don't forget, as PoRk pointed out, the purchase of illegal drugs is a cost borne entirely by the relocating employee!

TN HR

Not to mention "...our expense in our dedicated motel.......". Would that be the 53-footer out back A.K.A the Oink Inn Express (continental breakfast optional)? :DD