When you take a business trip there are certain things that spring right out at you when it comes to the question of tax write-offs. I mean certain obvious things that it would just make sense to write off. The names the tax laws have given these sorts of things are "ordinary and necessary" expenditures. So-you live in Utah and you've got to get to California to meet an important potential business partner. Ask yourself: What do I need-what's actually necessary-for me to get to California. A new suit? Probably not. A new portable DVD player so that I don't get bored on the plane? Definitely not. Getting a facelift and hair implants so that I look younger, fitter, more presentable? No.
You get the picture. To get to California you'll need a plane ticket. You'll need to get around an unfamiliar state somehow, so a car rental. You'll need to eat, you'll need to sleep indoors. Etc.
Let's get more specific. Let's ask ourselves the question, "What are the tax laws covering business meal deductions?" Eating is necessary if you want to live, and sometimes eating out with potential business partners or current business partners is essential for the health of your business. Fair enough. Even writing off taxes for business meals, however, gets a little tricky if you look closely enough at it. In most states there's a typical rule of thumb that you can write off 50% and 50% alone of a business meal for tax purposes. And the government requires strict attention in this area. You've got to prove that it was business and business alone that sent you to that steak house. If it looks as if you're writing off a "business" meal that was really merely a personal indulgence, you're going to get in trouble. Of course that is only if you get audited.
When it comes to business meals and tax write-offs, it's got to be strictly business all the time. Remember to keep careful, careful track of all of your business meals. Make sure, when tax time slithers up, that you only include those business dinners that common sense would declare ordinary and necessary for your business. Document them etc.
One last thing: Small business owners (i.e. people who run a business completely by themselves or have just a few employees) often forget that they can take advantage of the same tax laws that big businesses do. It's typical for a small business owner to not have two separate bank accounts, one for his personal life and one for his business. If he'd keep careful track of ordinary and necessary expenditures, however, including travel, meals, etc., he could save himself a lot of money. Remember-you don't want to pay the government more than you owe! The small businessman can write off strictly business meals, too.