As the summer heats up, vacation season kicks into full swing. Employees with office jobs enjoy all those traditional perks like paid vacation days, while time-pressed, cost-conscious startups, small business owners, and contractors are left wondering how to get that much needed time off without jeopardizing their business and clients.
However, small businesses, startups and entrepreneurs have one advantage, and that’s the ability to mix business and pleasure…at least when it comes to expensing parts of your summer travel. Here are some of the basics of what you need to know (but as with any general tax advice, it’s a good idea to discuss your specifics with a tax advisor):
1. The primary purpose needs to be business.
The IRS will let you deduct travel expenses if the primary purpose of the trip is for business. You can include a few days of fun in a business trip, but the majority of days must be for business activities. If not, you won’t be able to make any transportation deductions. So, if you have 3 days of client meetings (or a seminar) and 2 travel days, that counts as 5 business days – meaning you’d most likely be able to tack on 4 days of vacation and still have it count as a business trip.
2. What can you deduct?
In general, you’re able to deduct any transportation costs (plane tickets, taxis, airport parking, etc.) needed to get you to your destination. And as a general rule of thumb for U.S. based companies and startups, you can deduct 100% of lodging, tips, car rentals, and 50% of your food for any of the business days. Refer to IRS Pub 463 for all the details on which expenses can be deducted. Continue reading “Can Startups and Small Businesses Turn Summer Vacation into a Tax Deduction?” »