Whether your business takes you around the world or Phoenix, as a small business owner you likely have travel-related business expenses that can be deducted. It has always been important to keep accurate records of business expenses, but it no longer has to be a big hassle. Armed with a smartphone and a few apps, tracking your expenses has never been easier. To maximize your deductions, first, make sure you know the rules, so you track the right expenses with the proper documentation.
In general, food and lodging expenses are deductible when incurred while doing business away from home. Of course, like everything related to taxes, there are rules to know and follow.
You need to substrain any expense over $75 by records or other evidence. Allowed forms of evidence include diaries, logs, receipts, paid bills and expense reports. Be sure to note the amount, date, place and essential character of each expense. It pays to document as costs are incurred. If you don’t and then try to input your expenses all at once just before your taxes are due, or when the IRS requests documentation in an audit, they are less likely to be accepted than those that were recorded when the expense occurred.
Lodging expenses must be substantiated with actual receipts and are 100% deductible. Meal expenses are only deductible if the trip is overnight or long enough that there is a need to stop for sleep or rest to properly perform one’s duties. You must substantiate the amount of the meal expense. You can record the individual meal expense or use a “standard meal allowance” which ranges from $46 to $71 per day. In general, you can deduct 50% of meal expenses.
What if your spouse travels with you? Spouse travel expenses are not deductible unless your spouse is your employee, and the expenses are bona fide business travel expenses, and the expenses would otherwise have been deductible by your spouse. If your spouse travels with you when on business, there are a few things to consider. For lodging and auto expenses, the law does not require you to allocate costs between you and your spouse. For example, if your room rate is the same for 1 or 2 occupants, you can deduct the entire expense.
Once you have the rules down, you’ll want to consider using one of the many apps available to help record and organize travel expenses. Here are a few apps that you ought to consider if you do any amount of business travel. Just remember, regardless of the tool you use, you still need to know and follow the rules.
ProOnGo is an app specifically developed for small businesses. It allows users to track both employees’ expenses and clients’ payments via a mobile app and a Web application. The app allows you easily sync with either the Web or the desktop version of QuickBooks.
A free 30-day trial is offered. After that basic plans (5 users) start at $27/mo.
An individual subscription is available for $15/mo.
This app is useful for keeping track of mileage and expenses for your car. It was specifically designed to adhere to the IRS guidelines for using transportation as a write-off. Sync with Dropbox for easy access when you are doing your taxes.
If you have your daily driving expenses reimbursed, having a good mileage tracker is a must-have. Self-employed business owners would benefit from tracking mileage for tax purposes. This app tracks your drive using GPS and estimates fuel costs with a few simple inputs.
Concur organizes and tracks, saves and submits travel expenses. Employers and employees can use it on-the-go. Submit expense reports online or clicks from a mobile phone. Compatibility: iPhone, iPad, Android, and Blackberry
The Expensify mobile app gives you a quick and easy way to track expenses, snap pictures of receipts and create expense reports.
This app allows you to easily track expenses, mileage, and time.
Compatible with iPhone, iPad & iPod Touch.
Have questions about business travel expenses? Give me a call.