Small businesses often fail to take advantage of two important tax deductions: business travel and dining. Business travel is fully deductible and covers the actual trip from the company's home city to the destination. The business travel deduction also allows for travel-related expenses including taxi fares, dry cleaning and meals.
The dining is also at least 50% deductible and in some cases is 100% deductible even when not traveling. This holiday season take advantage of available deductions for business travel and dining by following the five tips below.
1. Travel With Purpose
If possible, plan your holiday travel around an event -- like a business conference or trade show related to your industry. The only guideline to remember is that the event must be one which will strengthen or grow your business in some way. Most conferences would easily meet this criteria since they're often educational and offer opportunities for networking.
2. Be Proactive
You can also create business opportunities while on vacation. If you happen to have customers in the vicinity of your destination, set aside some time to connect with them then. Not only is facetime with your customers beneficial, but visiting their homebase will help you gain better insight into their needs. Also try to spend an hour or two each day reaching out to local prospects and introducing your services.
3. Wine and Dine Them
Talk business at the table and you may be able to deduct 50% of the bill. Many small businesses neglect this particular deduction because they are unsure what counts. A good rule of thumb is that there must be some conversation that is intended to either grow your business or make it better.
4. Take Care of Your Employees
A company is only as good as its employees. Show your employees appreciation by providing them with some snack and drinks. All refreshments offered to your employees, say items in a break room, are 100% deductible. Some dining expenses are capped at 50% deductions, but providing your employees with coffee, tea, and snacks is deductible for the full amount of what was spent.
5. Make It A Party
Throwing an office party? As long as the employees outnumber other guests, the party counts as a deductible experience with no percentage limitations.
The holidays are prime time for gaining important year-end deductions in the two most neglected areas of business travel and dining. Get creative and take advantage of these tax savings.
For more ways to maximize travel and dining deductions, contact Fusion CPA today and put our tax experts to work for your business.
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