How To Travel For FREE As An eCom Business Owner
I want to explain to you how business owners get to travel for free!
So There is no free lunch in the world first of all, but yes, there are ways to get free travel within the IRS business travel rules guidelines. So there are 3 requirements to get there.
Travel = Needs to have a business purpose
First, the trip you are taking must have some business purpose; it can be anything from client meetings, conferences, R&D for the business, or any revenue-generating travel activity.
Travel = Ordinary and necessary
The 2nd req is the travel needs to be ordinary and necessary; this means that within your industry, this is a very typical type of business trip you would take. A big tip to remember about business travel is that there is a difference between domestic and international travel.
Traveling Domestically
When you travel domestically, is it an all-or-nothing rule? If you spend at least 50% of your trip on business, then it is all deductible, but if it is less than 50%, then none of the journeys can take as a tax deduction.
Traveling Internationally
International travel is proportionate- so if you spend 30% of business, only 30% is deductible. If you spend 70% on business, 70% of the trip is deductible. So that’s something to remember when planning your trip, as the location matters how much you can travel for free. So the 3rd requirement is that you have detailed recordkeeping for your business travel.
Ensuring you have all your source documents
You want to ensure you save all the receipts and brochures from the conferences from proving that the travel is indeed for business travel if you ever get the IRS knocking on your door.
So, Alan, you may wonder why you bore me with all that. I’m just here to learn about free travel…ahh yes, so if you can meet all three of these, it is possible to get some free travel in between this time.
How?
By taking advantage of domestic travel’s “All or nothing rule”- Making sure 50% of your journey is business related, you can enjoy some leisurely journey and have a good portion of the trip paid for!
Let me break it down in an econ example that we got…so Steve, a client of ours……..is traveling for work; He came to us. He told us that he travels to SF annually for a Technology Trade Show for 4 days, and he also let us know how he has wanted to go on vacation but couldn’t find the time. Well, we let
Steve knows that if he plans correctly, he can TRAVEL on vacation for free while he’s in Boston. He was confused but excited at this news. So we explained how it would work to him and how it went down.
Adam extended his trip to 7 days and spent days 1 and 2 attending the Technology Trade Show, and then he spent days 6 and 7 meeting with potential clients he met from the trade show. This way, he can spend days 3-5 enjoying all the great food in SF and visiting the pier.
You see, by ensuring that the beginning and end of the trip were for business purposes, he could enjoy a tax-deductible flight to SF, both going there and coming back. And by making sure at least 50% of the trip was work-related, he could deduct the whole trip as a business trip.
This means he could get his meals covered and take advantage of other excellent business expenses that he can deduct while traveling, such as gratuity/tips, laundry, baggage fees, rental car, and dry cleaning, which can all be deductible too!
And we texted him on the trip to make sure to Keep all email confirmations, tradeshow schedules, and names of some of the speakers of the events and transfer them to us for clean recordkeeping for his month-end close bookkeeping process to ensure he is fully shielded if the IRS was ever to audit his books.
These are some of the valuable consultations we provide our clients daily to ensure they can always make the best business decision and enjoy their life at the same time. We hope you learned a lot from this video on how to make your next business trip more FUN; if you have any questions about business travel or tax deductions, please feel free to comment below, and we will try our best to help you.
Introducing Tax-Free eCom
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