There is a continuous growth in both business and leisure travel spending.
As a business owner, you likely have employees who travel for work every year. This means you’re likely spending plenty of money on business travel expenses.
No matter what your position is, getting a business travel expense deduction approved is easier when you know the policy in place. Keep reading for a no-frills guide on what these expenses and deductions are, and how you can be allowed to take them.
Keep Track of Expenses
The most important part of this is to keep track of your receipts. You should keep all of your receipts in a safe place or a file folder.
When you get home from your trip, put all of your receipts in the folder. Keep track of all expenses related to your trip, including airfare, lodging, transportation, meals, and incidentals.
Know What Are Deductible
Deductible expenses must be considered “ordinary and necessary” for business travel. Remember that you can only deduct the portion of expenses that is attributable to business activities.
Additionally, the expenses must be directly related to the business purpose of the trip.
Know Your Per-Diem Rates
The reimbursement of business travel expenses can be a confusing and daunting task for both employees and employers. Have a clear understanding of what can and cannot be included as a business expense.
Know what the per-diem rates are for various locations so you can ensure that both the employee and the employer are on the same page.
These rates are meant to reimburse employees for their expenses while on business travel. If you know the rates, you can help make the process of the travel reimbursement much smoother for everyone involved.
Learn How to Maximize Your Business Travel Deductions
Be sure to keep all of your receipts, don’t just collect them. You will need these to prove your expenses.
Schedule your travel so that you can take advantage of the deductions for travel expenses. For example, you can deduct the cost of your plane ticket, as well as your lodging and meals.
Be sure to keep track of your mileage. You can deduct a certain amount for each mile you travel for business purposes.
The IRS allows you to deduct certain expenses related to business travel, including airfare, lodging, meals, and transportation. However, there are limitations on what you can deduct and how much you can deduct.
Common Mistakes in a Travel Reimbursement
Some common mistakes can be made when submitting a request for travel reimbursement and this includes: forgetting to include all expenses, submitting receipts that are not itemized or are for personal purchases, and not including the proper documentation.
Another common mistake is requesting reimbursement for more than the allowed amount. Be sure to check with your employer ahead of time to find out what is covered and what the maximum amount is that can be reimbursed.
Finally, do not wait until after your trip to submit your business travel expense form. It is best to submit as soon as possible to avoid any delays in getting your money.
Know The Basics of Business Travel Expenses
Whether your business trip is for client meetings, conferences, or to check out potential new business sites, expenses can quickly add up.
However, if you know what business travel expenses are deductible, you can minimize your tax burden and make the most of your trip.
Check out more of our articles on how to succeed in business today.