| Summer is here and for many of us that means | | | | separate accounts so only my meals are subject |
| summer business trips. I love traveling for | | | | to the 50% limit. |
| business. It usually means I'm on my way to | | | | The second reason is so I can maximize my |
| speak at a seminar in a great location. But, my | | | | deductions. This is explained in Rule #3. |
| least favorite part about business trips is keeping | | | | *Rule #3* |
| track of all of my receipts. | | | | Use Per Diem |
| I use to come home from a business trip and find | | | | To maximize my business travel deductions, I |
| my receipts in various places over the next | | | | separate my meal receipts AND I use a personal |
| several days (or weeks!). Some I would find in | | | | credit card or my personal cash to pay for all of |
| my wallet, others in my briefcase, more in my | | | | meals while traveling. I do this because it is the |
| coat pocket, some in my car and with all of | | | | easiest way to make sure I maximize my |
| these, I was still missing receipts! | | | | business travel deductions. |
| That was until I came up with my system for | | | | Here's how I maximize my deduction: |
| easy business travel record keeping. This system | | | | When traveling on business, meal receipts are not |
| is so simple to use and it maximizes my business | | | | required in order to deduct a meal expense. The |
| travel deductions. | | | | IRS issues per diem rates for meals and these |
| Here's how my system for easy business travel | | | | rates can be used for a meal deduction instead of |
| record keeping works: | | | | the actual expense. |
| *Rule #1* | | | | This means I can use either my actual meal |
| Use the Convenience and Leverage of Email | | | | expenses or I can use the per diem rates. Of |
| When my airfare is booked, the airline sends me | | | | course, I always pick the one that gives me the |
| an email automatically that has all the information I | | | | biggest deduction! |
| need for my receipt. I forward that email to my | | | | I have trained my bookkeeper to compare the |
| bookkeeper immediately upon receipt. That takes | | | | total of my actual meal receipts to the per diem |
| care of the airfare receipt. | | | | allowed. My bookkeeper then determines which |
| When I check out from my hotel, I request to | | | | provides the greater deduction and records that in |
| have a copy of my bill emailed to me. I forward | | | | my bookkeeping. |
| that email to my bookkeeper immediately upon | | | | For example, if my meal receipts total to $125 |
| receipt. That takes care of my hotel receipt. | | | | and the per diem totals to $200, then I can |
| With my airfare and hotel receipt, I have the | | | | legitimately deduct $200 for meals. This is one of |
| receipts for the majority of my actual expenses. | | | | my favorite strategies because I have increased |
| But most of the receipts from my travel come | | | | my business deductions without spending any |
| from the other expenses, like meals, cab fare, | | | | additional cash! |
| cash tips. Here is how I tackle those receipts. | | | | Here's how I simplify the record keeping: |
| *Rule #2* | | | | I mentioned that I use a personal credit card or |
| Pack 2 Envelopes | | | | personal cash for my meal expenses while |
| Part of my packing for a business trip includes | | | | traveling. I do this to make sure my business |
| packing 2 envelopes in my carry on bag. The first | | | | claims the larger of my actual expenses or the |
| envelope I label with my destination, travel dates | | | | per diem allowed. |
| and "Meals." The other envelope I label with my | | | | Once the greater of my actual meal expenses |
| destination, travel dates and "Other." Any time I | | | | and per diem has been determined, my |
| get a receipt from a meal, it goes in the "Meal" | | | | bookkeeper then completes an expense report |
| envelope. Any time I get any other receipt, I put | | | | that claims the greater amount. My business then |
| it in the "Other" envelope. After my trip, I give | | | | reimburses me based on the expense report. |
| the envelopes to my bookkeeper to record my | | | | Worst case is I get reimbursed the exact amount |
| travel expenses. | | | | I spent, but often times, I'm able to get |
| It's such a simple system, but it works! | | | | reimbursed more than what I actually spent |
| You may be wondering why I separate my meal | | | | because the per diem rates are greater. This |
| receipts. There are 2 reasons I do this. | | | | means my business gets a bigger deduction and |
| First, with my meal expenses separated, it makes | | | | my entire reimbursement (even if I am |
| it easier for my bookkeeper to code the | | | | reimbursed more than what I actually spent) is |
| expenses properly. My meal expenses are only | | | | tax free to me! |
| 50% deductible, but the rest of my business | | | | This is my favorite kind of system - it's simple |
| travel is 100% deductible. Separating the two | | | | and it maximizes my deductions! |
| helps ensure that the expenses get coded to | | | | |