Want to keep Big Brother, the IRS, happy when it comes to your business trip records? OK, just relax and take a gander at these rules. These rules are not difficult to follow, but you do have to follow them precisely.
For every expense, be sure to record the following:
What did you spend money on? List each expense separately, such as business meals, taxis, or lodging.
If you paid for airfare, list the city into which you flew. If you grab a taxi, list to the “to” and “from” parts of the trip. If you tip a bellman, list the hotel at which you gave a tip.
It’s important to list the date and time you left for your trip, as well as the date and time of your return. Then, for the individual travel costs during the trip, just make a list like the date and each expense was incurred.
This is a biggie. You need to justify to the IRS that the travel expense was a legitimate business expense. For instance, buying a meal for a business partner is a legitimate travel expense.
Proof of Payment
The IRS wants receipts to back up your individual expense listings to prove that you paid the expenses. For instance, you’ll need copies of your hotel bill, taxi fares, and receipts for business meals that show you paid for these items.
The easiest way to handle documenting your business travel expenses is to:
– Always ask for a receipt
– Keep all your receipts (and other documentation like ticket stubs) in one envelope during your trip
-Use a single form to document all your business travel expenses when you get home. The form should cover all the criteria above. Fill out the form, and then connect the receipts to the back of the form when you’re done.
Voila! You have just kept the IRS happy by documenting your business travel expenses according to IRS regulations.