If you intend to deduct business travel expenses on your income tax return, you need to keep organized and adequate records. In the event of a tax audit, having proper documentation will ensure that you will be able to substantiate your deductions and get the tax savings for which you are eligible.
Many small business owners or self-employed individuals use their own vehicles for business related travel. No one wants to miss out on these tax deductible travel expenses. Setting up a system that helps you keep good records of your business travel expenses can be easy. Follow these five tips:
- Keep a timely record of expenses. Take a few minutes each day to record the expenses, while the information is fresh.
- Collect all receipts in a designated place – a large envelope of folder.
- Identify each receipt with the date, customer name and business purpose. Even if your receipts are scattered, you will have the appropriate information.
- Keep a log that records the date, event, expenses and business miles traveled. If you have expenses without receipts, the log serves as your record.
- Maintain a weekly expense report. It will be considered a timely kept record for IRS purposes.
Note: If you submit to your employer under an accountable plan, the rules are different. It's a good idea to direct any tax questions to a professional tax accountant.
Are you interested in learning more about tax preparation services? Charles P Myrick CPA is recognized as one of Washington DC’s top accounting firms for small businesses. Contact us for additional information regarding the tax aspects of sole proprietorships, or if you need assistance in satisfying any of the reporting or recordkeeping requirements. (202) 789-8898