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Do you travel for business? According to one study, Americans make more than 500 million business trips per year. Whether it’s you or your employees traveling, regular business travel can add up. In 2018, people spent $327.3 billion traveling for business.
A high business travel bill might make you second guess if attending trade shows, attracting new customers, and meeting new suppliers is worth it. But before you eliminate travel in your small business, consider scaling back.
3 Tips To Slash Business Travel Expenses
Staying in five-star hotels, eating steak dinners, and renting a car while traveling for business can break your budget. Not to mention, the cost of flights can be astronomical if you aren’t knowledgeable when booking.
However, savvy travelers don’t spend an arm and a leg on flights, meals, lodging, and other modes of transportation.
Are you ready to become a savvy business traveler?
Use the following tips to help slash your business travel expenses and maximize your return on investment (ROI). And who knows—you might even decide to integrate some of these tips into your personal travels, too.
1. Read Up On Travel Tips
As a small business owner, you know how important taking advice is. If you’re not a business traveler who can maximize savings, research tips to boost your knowledge.
Reputable sites, like Johnny Jet, provide updated tips on all things travel. You can check out travel articles to expand your business travel knowledge and improve your savviness.
Before you book flights and accommodations for business travel, regularly read up on the latest travel news. Keep an eye out for airline and lodging promotions. The more you frequent the news, the more likely you’ll snag a great deal before it expires.
Time-sensitive travel tips can help you penny pinch. Be mindful of general travel tips that rarely go out of style.
Here are some go-to travel tips that can help you cut your small business travel expenses:
- Minimize your luggage to avoid extra roundtrip fees when you fly
- Know when to book flights (e.g., Tuesdays at 3 p.m., seven weeks before you fly)
- Search for flights in Incognito Mode to make sure you see the lowest deals
- Compare hotels and airlines before booking
- Calculate whether you should bundle travel and lodging or book separately
- Estimate other transportation fees to decide whether you should rent a car
- Stay with a friend or family member, if possible
- Be frugal when it comes to purchasing meals
But that’s not the only way business travelers can save.
Another popular way to cut business travel costs is to take advantage of frequent-flyer programs and airline credit cards. There are different cards for different needs, including international travel, domestic travel, and business travel.
You can rack up travel miles or points each time you and your employees travel for business. You may end up with free flights and other travel benefits, like travel insurance.
Many hotels and hotel-booking websites offer rewards programs, too. You may be able to earn a free night or other perks when you stay a certain number of nights.
2. Craft a Travel Expense Policy
Before implementing business travel for your small business employees, first create a policy. If you plan on covering employees’ travel costs, you must be upfront.
You can choose to offer per diem pay (either before or after the trip) or reimburse employees for what they actually spent. Per diem pay is a daily allowance that covers an employee’s business travel expenses.
Detail what expenses you’ll cover. Many travel policies cover lodging, transportation, meals, and incidental expenses. Clearly state how much you are willing to pay for. You may also consider listing uncovered expenses so employees can plan ahead of time.
As a recap, your travel expense policy should explain:
- Whether you’ll use the per diem or actual expense method
- What expenses you will and won’t cover
- How much you are willing to pay for each expense
- When employees need to submit their claims by and how they can do it
- What documents employees need to submit
- How and when employees will receive their reimbursements
Include your travel expense policy in your employee handbook.
Be sure to follow your guidelines when you travel, too.
3. Claim Business Tax Deductions
Another way to cut business travel costs is through the IRS. That’s right, you can claim a business tax deduction for qualifying business travel expenses on your tax return.
By claiming business tax deductions, you can reduce your total taxable income, which will likely cut back your tax liability.
Business travel expenses must be ordinary and necessary if you want to claim them. You can only claim expenses if you travel for business.
The IRS considers traveling to be when you leave the city or area where your business is located for more than an ordinary day’s work.
Some travel expenses you can deduct include costs for:
- Traveling by airplane, train, bus, or car between your business area and destination
- Taking taxis or public transportation between the airport or train station and your hotel, the hotel and work location, or work locations
- Shipping of baggage and business materials from your business to the destination
- Using your car for business errands
- Eating meals
- Dry cleaning and laundry
- Business-related calling or faxing while on your trip
- Tipping for business-related services
Keep in mind that you cannot deduct airfare if you use frequent-flyer mile credits. You can only deduct the amount you pay.
Although you can claim a business meal deduction, you can only deduct 50% of the total cost.
Make sure to keep records of all your expenses. Hang onto your records for at least three years. If you’re self-employed, you can deduct your travel expenses on Form 1040, Schedule C.
For more information on the travel expense tax deduction, check out the IRS’s website.
Bio: Rachel Blakely-Gray is a content writer at Patriot Software, LLC. Patriot Software offers online accounting and payroll software for small business owners. At Patriot, Rachel enjoys providing actionable, growth-oriented content.
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