Planning a business trip

For business owners, a business trip can be a valuable tool and a tax deduction. Usually, however, the business owner arrives at tax time only to discover that he has to pay a large amount of tax.

Then the wheels begin to turn. “What other deductions have I missed? Oh yeah, family vacations!” Thoughts turn to family vacations and how they could be interpreted as a business trip. The truth is that unless you have actually done business, it is too late after the fact.

It is possible to combine a business trip and a family vacation, but there are things you need to do well to make it legal. Every summer there are work-related seminars and trips and it’s nice to bring your family. Please note that only the business portion of your trip is tax deductible.

If you drive your vehicle, it no longer costs you more gas to take your spouse and children, so all gas is deductible. But if you stop to eat, only people involved in the business part of the trip can deduct the food.

If you all stay in one hotel room, the room may not cost more than if you stayed alone, the entire room is deductible. If it costs more for more people in the room, then the extra is not tax deductible.

Amusement parks are generally not tax deductible unless you are in an amusement park-related business. Deductions must be honest and related to your field of business.

Here are some things to do when planning and taking a business trip.

1. Plan ahead. Make a plan of where you are going and what business you will conduct. There are many sources (especially on the Internet) that can give you information about businesses and events in the area you plan to go.

2. Corporate purpose. Have a specific purpose for the trip. It can include things like visiting other businesses like yours to see how they are doing, networking with customers or suppliers, looking for expansion opportunities, etc.

3. Save receipts. The key to taking deductions is being able to prove that you had expenses. Receipts include the actual 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 bring a different perspective to the information you collect and the places you research.

If you ask family members for help, ask them to write a report at the end of the trip with their opinions and perspectives. Make sure they relate it to the purpose of the trip.

5. Record where you go. Keep track of the places you go that are business related. A notebook or planner can work. An envelope with registration on the front and receipts and information from places you go inside is also helpful.

6. Record who you talk to. Keep a record of who you meet and what they talk about. Again, a notebook, planner, or envelope can be helpful.

7. Record what you research. Keep a record of the information you collect.

8. Business cards. Keep a business card of people you meet and businesses you visit that are related to the business.

9. Save your ticket stubs. Save stubs from events like seminars and trade shows. Write down what you learned from your events.

10. Summarize. At the end of the trip write a summary of what you achieved and the conclusions you reached.

The IRS carefully scrutinizes business travel. Its purposes and validity can be stretched. By planning ahead and keeping good records, your legitimate expenses can be deducted comfortably and within IRS codes and rules.