Although COVID-19 has prevented some of us from traveling, some are still planning on that fun summer vacation. One of the perks of being a small business owner is that you can deduct some of those expenses from your summer vacation. You just need to know your motives before you go!
To begin, let’s change the name of your “Summer Vacation” to a “Business Trip”. Your goal shouldn’t be to “write off my vacation” but “how do I add some vacation to this business trip”. The key elements to writing off your trip is that it’s primary purpose is business.
There are four things to plan for before you take your trip:
- Conventions or seminars – Take a look at the calendar and see if there is a convention or seminar.
- Clients or customers – Try to set up a time to meet with clients or customers.
- Vendors – Make appointments or plan meetings with anyone you do business with.
- Research – This is a shady area but see if there are any research opportunities on your trip.
Now the IRS has several requirements that each small business owner must abide by to write off these kinds of trips:
- Majority – The majority of the days of the trip must be business related. Business days include travel days, convention or seminar days, and weekends.
- Planning – Make sure conventions are planned in advanced and meetings with vendors are scheduled.
- Documentation – Save all your receipts over $75.00 and any lodging expenses (even under $75.00).
- Notes/minutes – You need proof that you attended these activities so take notes to show prove you were present at each meeting.
- Reasonable – All expenses need to be reasonable to write-off. The main write-offs include travel, accommodations, and meals.
So you’re probably wondering, “Where does the vacation come in?”. Let’s look at a few examples and see if that make sense.
If you wanted to visit a friend in Chicago and stay for a few days, take a look at your schedule. You could travel by plane on Thursday (business day), attend a seminar Friday (business day) and visit your friend on Saturday (business day) Sunday (business day) and Monday-Wednesday (vacation days) travel home Thursday (business day). The majority of the days were considered business days and all your flights, meals and accommodations are deductible.
- 2 Travel Days = Business Days
- 1 Seminar Day = Business Day
- 1 Weekend = 2 Business Days
- Mon-Wed = Vacation Days
4 Business Days + 3 Vacation Days = Business Trip
So instead of thinking, “how can I write-off my vacation?” think “how can I add a vacation to my business trip?”. As a small business owner, you want to save money, and what a better way to save than planning a trip around your business! For more information, click here to visit our website.
Ben Sutton is the founder of Mazuma USA, an accounting firm providing tax, bookkeeping and payroll services to small businesses. Since founding Mazuma, Ben has established himself as an expert in the small business world. He’s still driven by that same desire to provide accounting help to all small businesses – from photographers, bloggers and creatives to lawyers, doctors, and dentists, everyone needs affordable accounting help. Ben is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. But Ben considers his greatest achievement and credential to be his happy wife and four children.