Small Business Travel Expenses
Starting and developing a small business often entails business travel for meetings, completing work duties and establishing partnerships. While travel can be a substantial expense for small businesses, the IRS has laws in place to help owners save on tax money by deducting eligible travel expenses.
What are travel expenses?
The IRS defines travel expenses as the ordinary and necessary expenses of traveling away from home or tax residence for your business, profession, or job. You can't deduct expenses that are extravagant, or that are for personal purposes.
You can claim travel expenses for your small business if you are traveling away from home and your duties require you to be away from your tax home for a period longer than a workday, and you need to get sleep or rest to work while you are traveling away.
What travel expenses are deductible for a small business
The IRS permits the deduction of various travel allowable expenses. These include:
- The expenses incurred for traveling by bus, car, train, or plane from your place of residence to your designated business destination.
- Transportation costs associated with traveling from a train station or airport to your hotel, or for commuting between your hotel and the site of your work or meetings.
- You can claim the use of your personal vehicle at your business destination by utilizing either the standard mileage rate or actual expenses. This includes parking fees and tolls directly linked to business activities. Track your mileage conveniently with the Driversnote mileage tracker to automatically record your mileage and efficiently categorize your trips.
- If you use a rental car, the deduction is limited to the proportion of the car's usage for business purposes.
- Reasonable expenses for lodging and meals, excluding those intended for entertainment purposes. See more about claiming tax deductions on meal and lodging expenses as a business in our dedicated article.
- Other expenses
- Shipping expenses for moving baggage, display materials, or samples from your permanent workplace to your temporary work location.
- Costs for laundry and dry cleaning services.
- Tips provided for services that align with acceptable business expenses.
- Business-related phone calls made during your trip, as well as expenses related to business communications carried out through other communication devices.
- Additionally, other similar and essential expenses, such as renting a computer and other needed equipment; and travel to and back from business meals and other business meetings are also eligible for consideration.
How to account for travel expenses for a small business
You will need to keep records of your small business travel expenses in order to claim them as deductions at tax time. Sufficient records will include receipts and invoices of all eligible expenses you’ve had while away for work. Make sure to keep all records for 6 years from the date of claiming your tax return in case of audits from the IRS.
Additionally, if you are claiming mileage for your personal vehicle you will need to record the mileage you’ve traveled both for business and personal purposes while away, as well as all receipts of car-related expenses, if you chose to claim actual expenses for your mileage. See more about claiming mileage from the IRS as a self-employed individual or small business owner.
We recommend using an automatic mileage tracker app such as Driversnote so you don’t spend unnecessary time manually writing down your trips. An automatic tracker will ensure all of your trips are logged and maximize your small business tax deduction.
Deducting travel expenses as a small business
As a small business owner you can and self-employed, you can deduct travel expenses on Schedule C (Form 1040) of the Profit or Loss From Business (Sole Proprietorship).
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Mileage reimbursement in the US — rates and rules for employees, self-employed and employers in the US.
The standard mileage rate for business will be 67 cents per mile, effective Jan. 1st, 2024 - up 1.5 cents from the 2023 rate of 65.5 cents.
Find out if you fall into one of the groups of employed individuals who can claim mileage on taxes in the US in 2024.