For most businesses, having employees travel whether just a handful of times per year or on a weekly basis is common. Keeping track of travel expenses and knowing what can be deducted for taxes as well as what is to be reimbursed to employees is important. Setting clear guidelines up front about acceptable daily spending limits and tracking purchases to simplify year end tax filing can save time and money in the long run for your business.
If you are doing business in a city other than where you live or your business is located, it is considered a tax-deductible expense. Here is a helpful list to help identify qualifying business travel expenses.
When employees need to take a train, rent a car or fly to get to a business function or conference, the expense is deductible. Parking fees and highway/bridge tolls can also be included and remember to track mileage rates to offset what is spent on gas and car maintenance if employees are using their personal vehicles.
Daily meals during business travel are deductible within reason. As per the IRS, meal deductions are limited to 50% of the cost - so make sure your employees are aware before they start charging expensive client dinners.
Hotel stays also qualify for tax write-offs. Make sure that your employees always ask for an itemized bill when they check out so that only the qualifying portion of the bill is claimed - for example, you wouldn't want to reimburse an employee for their mini bar charges.
Other miscellaneous expenses you incur that are necessary for your business trip, like registration for a conference, equipment rental for a speaking engagement, or dry cleaning/laundry throughout the business trip, all qualify for tax deduction. Make sure that your employees are aware that these expenses can be claimed so that they keep track of their receipts.
Keeping Track of Travel Expenses
Often, it can be difficult to have employees remember to get receipt copies and submit in a timely fashion to your accounting department. When employees travel, it can also be hard to control what is being spent and ensure that they are staying within your businesses budget guidelines. A simple, effective way to manage employee spending is to use Emburse prepaid debit cards. Employees need to submit a purchase request prior to spending, which their business manager can approve. Once approved, the funds are preloaded onto the prepaid corporate debit card and available to be used immediately. To learn more about how prepaid debit cards can help your business better manage expenses, contact a member of our team today.