Planning a business trip
For business owners, a business trip can be a valuable tool and tax deduction. However, the business owner usually collects taxes at the time and finds out that there is a large tax liability due.
Then the wheels start turning. “What other discounts have I missed? Oh yeah, family vacation!” Thoughts turn to a family vacation and how it can be interpreted as a business trip. The truth is, unless you’ve already done your business, it’s too late.
It is possible to combine a business trip with a family vacation, but there are things you must do right to make it legal. Every summer there are business-related seminars and trips, and it’s okay to take your family with you. Be aware that only the commercial part of your trip is tax deductible.
If you’re driving, it won’t cost you any more gas to take your spouse and kids, so all gas is deductible. But if you stop eating, only people participating in the commercial part of the trip can deduct the meal.
If you all stay in one hotel room, the room may no longer cost more than if you stay alone, the entire room is deductible. If it costs more people in the room, the additional taxes will not be charged.
Amusement parks are generally not exempt from taxes unless you are in the theme park business. Discounts must be honest and relevant to your industry.
Here are some of the things you should do when planning and taking a business trip.
1. Plan ahead. Make a plan for where you are going and what business you will run. There are many sources (especially on the Internet) that can provide you with information on businesses and events in the area you plan to go to.
2. The purpose of the work. You have a specific purpose for the trip. It could include things like visiting other businesses like yours to see how they operate, making contact with clients or vendors, looking for opportunities to expand, etc.
3. Keep receipts. The key to taking deductions is to be able to prove that you had expenses. Receipts include physical sales receipt, checks, credit card statements, and bank statements.
4. Recruit family members. Depending on the type of business you’re involved in, there are times when your family can help gather information and give a different perspective to the information you collect and the places you look.
If you ask family members to help, ask them to write a report at the end of the trip telling their opinions and points of view. Make sure to link them to the purpose of the trip.
5. Record wherever you go. Keep a record of work-related places you go. A notebook or day planner can work. Also, the envelope with the record on the front and receipts and information from where to go are within easy reach.
6. Record who you are talking to. Keep a record of who you meet with and what you discuss. Again, a notebook, day planner, or envelope can come in handy.
7. Record what you are looking for. Keep a record of the information you collect.
8. Business cards. Keep a business card of the people you meet and the companies you visit that are work related.
9. Keep the ticket stub. Keep a stub of events like seminars and trade shows. Notice what you learned from your events.
10. Summing up. At the end of the trip, write a summary of what you accomplished and the conclusions you made.
The IRS looks carefully at business trips. Its purposes and validity can be extended. With advance planning and good record keeping, your legitimate expenses can be deducted comfortably and within IRS laws and rules.