Travel expenses are a juggernaut that most businesses haven’t fully figured. Tracking and reporting every expense is vital because travel expenses are deductible. And in case of an audit, these types of expenses get the hardest looks.
If you’re overlooking some of the travel expenses that means you’re paying more in taxes than you should, which could impact your profit margins and growth. One of the first steps you can take to improve travel expense reporting and tracking is using a travel and expense software. Here are some of the travel expenses most businesses tend to overlook:
1. Departure Tax
Departure tax is incurred when you leave a country by air. In some countries, the tax is included in the air tickets, while you pay at the departure gate in others. Doing some due diligence before leaving can help anticipate such charges and include them in your travel expense.
If the tax is included in the flight ticket, it’s covered as an actual cost of the travel, and you don’t need to worry about reporting it separately.
2. International Roaming Charges
It’s easy to remember reporting phone calls, communication and internet charges related to business trips. Most businesses forget to factor in roaming fees, which can drastically affect the final figure, especially in instances where conference and video calls are necessary.
Vaccination requirements differ from country to country. Depending on your destination, you might be required to provide proof of certain vaccinations before being awarded a visa.
In some instances, vaccinations are required to protect the employees from common diseases in the areas they will be visiting. Whether a requirement by the destination or by the business, vaccination fees should be included in the expense report.
This is along with any other medical or consultation fees associated with the travel, including essential doctor visits in your new location caused by trauma or illness.
Whether you include tips as a business travel expense depends on the customs of where you’re traveling.
In some countries, tipping is customary. Some like Dubai even go ahead and add a 10% fee to cater to tipping. When in such countries, tips should be included as a business expense.
Some Asian countries don’t consider tipping customary. It is even considered rude in countries like Japan. Should you decide to tip in such countries, you incur a personal cost since it’s not considered a business expense and will not be deductible.
5. Conference Registration Fees
A substantial amount of business travels are for networking, attending conferences, symposiums, and business shows. To cater to such events, organizers will often charge a small fee to the attendees.
Because these events benefit the business, they are often left out when declaring your business travel expenses. All conference and registration fees are considered a business expense and are tax-deductible.
The same goes for any tools or equipment you rent or hire for work purposes, including car hire and items like projectors.
6. Currency Conversion Fees
Currency conversion is necessary when you’re traveling to another country. In such cases, you have to consider the lost currency value associated with the exchange trade-in value.
Even when paying by card, unless the merchant accepts payment in the same currency, you should expect to incur some costs because of the price adjustment caused by the change in currency.
Other currency conversion expenses include when you withdraw money from the ATM in a foreign country and when you use a debit card.
Currency conversion costs might not be a significant cost on business travel expenses. Nonetheless, you should include them in your business’s travel expenses to avoid paying unnecessary taxes.
7. Baggage Handling Costs
Baggage operations is a big business with a revenue of about $29 billion per year. According to IATA, that translates to about $10 per bag per journey. The costs can include baggage delivery services to your destination and lost bag retrieval fees. Such costs should also feature in your business travel expense to facilitate deductibles.
8. Hidden Accommodation Costs
The considerable cost of accommodation means the cost can’t be overlooked. But upon arrival, you might realize there are some essential services you need that were not included in your itinerary.
Costs like Wi-Fi, laundry services, and parking could all affect your final bill. It’s important to indicate such costs and ensure they are included in your expenses at the end of your travel to facilitate tax deductions.
It’s important to remember that these expenses are subject to scrutiny and ruled out on various grounds. For instance, including mileage incurred when taking a personal trip on the business trip could result in complications.
Most of the expenses you incur if you bring your family along can also affect which business travel expenses qualify for tax deductions.
For more information on software solutions that can make your business expense management easier and more efficient, and ultimately save you more money in taxes, get in touch with us today.