The simplest business travel definition is travel that is undertaken for business purposes. Business travel does not include daily commutes or trips for leisure purposes. Usually, business travel implies work that requires being away from home for at least a day. Each individual journey is considered a “business trip.”
Business travel can be one of the biggest expenses for a company, whether you have a corporation, limited liability company, or other legal entity. Understanding why it may be necessary and how it can impact your business taxes is essential.
The Internal Revenue Service (IRS) has its own business travel definition. According to the IRS, business travel includes any travel that the taxpayer does away from the general area of their home for business purposes. Working away from the general area of your home is defined as outside the entire city or the general area outside your principal business location.
If you are a small business that is just starting out, it’s important to save as much as possible, even when on the road. Keeping track of tax-deductible expenses will be important when it is time to pay your taxes. The IRS defines deductible business travel expenses as “ordinary and necessary” costs incurred. These include transportation, lodging, meals, entertainment, and some incidentals.
These expenses are deductible by the business as long as there were no reward points used to pay for any of the expenses. For a business to deduct business travel expenses, they must be paid as reimbursements to employees. A business tax professional can provide more detail on how deductible expenses work. Just remember to keep track of them.
There are countless reasons you would need to go on a business trip. Many of these factors relate to the industry you are in and how your products or services are marketed. Here are some common reasons to go on a business trip:
In today’s largely remote environment, many companies communicate online with workers in different locations. This can be beneficial to limit the need for travel. But it may also mean that employees have to travel to meet for collaborative in-person work.
Whether you are the owner of a company or an employee, business travel can have a lot of great benefits. Employees may have the opportunity to learn more about your specific industry and return with new admiration and passion for their role, along with new ideas. The specific benefits are generally determined by the purpose of the trip. And some people simply enjoy seeing new parts of the world while on business trips.
Everyone’s situation is different. If the employee has children or a close extended family, frequent business travel may pull them away from meaningful events. Occasional travel is reasonable for most people, but when large amounts of time are spent on the road, it can have a negative impact on morale and mental health. Business travel can also be costly, so weighing the costs versus benefits is essential.
Business travel is a work-related trip that doesn’t include daily commutes, holidays, or vacations.
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Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.