To many companies, the idea of spending money on business-related travel can be a bit daunting. They are aware that there are deductions available, but with the economy in its fragile state, spending money on out-of-office meetings and business trips can seem excessive and even pointless. In reality, there are several reasons why 2011 is a great year to travel for business.
According to a recent report from American Express Global Business Travel and the GBTA Foundation, U.S. companies are advised to increase travel spending by an average of 4 percent. This increased spending is meant to optimize sales revenue, essentially equating to about $72 per employee on average.
These statistics are based on an analysis of 900 companies from 1998 to 2009, in which the authors found that for every dollar that was strategically invested in business travel, companies were able to see a $20 increase in added gross profit. This increased profit from business travel is a relatively recent trend, with the 20:1 ratio only developing in the last couple of years.
The authors of the report also suggested that companies in the U.S. have put a restraint on travel spending during the recent economic downturn, which ultimately proved to hurt these businesses rather than help them. In a time when businesses should have been investing more money in business travel, companies slashed travel budgets left in right, making the recession more difficult and detrimental to the U.S. than was necessary.
Some of the information above was taken from a recent article on businesstravelnews.com.
Better Tax Benefits
In addition to the increased profits inherent in business travel expenditure, companies can take advantage of a number of travel-related tax benefits. Whether you’re saving on airfare, hotels, or car mileage, taking advantage of deductibles can add up to huge savings
If you wine and dine customers and vendors, you can usually deduct half the cost of the meals, if you document the expenses properly.
The mileage deduction got a little bit better in 2011. If you use your personal car or truck for business, you can deduct the costs associated with business-related driving. The law lets you choose between deducting your actual costs or using an IRS-set mileage rate (50 cents per mile in 2010 and 51 cents per mile in 2011).
There are quite a few tax benefits to take advantage of when travelling the key is stay on top of your record keeping. Following recent Tax Court rulings, the IRS has become stricter in its acceptance of deduction records. Inadequate records and those constructed after the fact from invoices are no longer accepted. The IRS only accepts valid substantiation of travel, mileage, and listed property deductions, although in many cases little more than a written log is required to meet substantiation requirements.
Whether the record is maintained on a spreadsheet, logbook, or diary, it must be recorded around the actual time of the event. Ideally, records would be taken daily. Weekly records are acceptable as well, but monthly and annual records certainly decrease your chances of winning an audit.
Almost any deduction for travel using a passenger car will require some sort of mileage log, but this is not the case with all vehicles. In fact, qualified non-personal use vehicles, such as delivery trucks, school buses, and ambulances are exempt from mileage records. In addition, there are several cases in which employees are not required to keep a log when using a company car as long as it is used for limited personal use.
For those who failed to record their travel deductions correctly, there is a policy known as the Cohan Rule, which allows for deductions on some missing or inadequate records granted that there is credible evidence or adequate documentation to substantiate the claim.
To find out more about IRS mileage deductions, view this post on Hubpages.com.
Although it may seem unnecessary and even a waste of money, off-site company meetings can actually serve to motivate, revitalize, and re-energize your employees. Even a slight change of scenery can help build team spirit and get everyone’s creative juices flowing. A meeting away from the office may also allow employees to find a new interest in a project, stimulate fresh ideas, and cultivate a renewed commitment to company goals.
So whether a company has been in business for years or just starting out , now is the time to take advantage of the numerous benefits that come with business-related travel, and this can only be done by increasing travel-related spending in 2011.