How to Deduct Business Travel Expenses for Online Entrepreneurs
Business travel can be a great part of running an online business—but it can also leave you wondering what’s actually deductible and what isn’t. As a CPA who works with online entrepreneurs, I see a lot of confusion around travel write-offs, so let’s walk through the basics in a simple, non-overwhelming way.
If you understand just a few key rules (and keep good records), you’ll be in great shape. While I’m here to help, it’s always a good idea to consult with a tax professional or the IRS for personalized advice based on your specific circumstances.
Understanding “Ordinary and Necessary” for Business Travel Deductions
When it comes to business travel deductions, two essential words to be aware of are “ordinary and necessary.” For expenses to qualify, they must be common and widely accepted in your industry (ordinary) and helpful and appropriate for your business operations (necessary). An expense does not have to be indispensable to be considered necessary. If your travel expenses meet these criteria, you’re on the right track for potential deductions.
Knowing what qualifies as “ordinary and necessary” will help you claim the deductions you deserve. And, tax laws can change, so staying informed and seeking professional advice is crucial.
The Key to Qualifying: Business Purpose
The IRS emphasizes that the primary purpose of your trip should be for business related activities to qualify for deductions. This means that you should engage in activities that directly contribute to your business during your travels. Attending conferences, networking events, meeting with clients or sponsors, and content creation are some examples of qualifying business purposes.
If you mix business + personal time (very normal!), you can still deduct the business portion. For example: If you stay two extra personal days after a conference, only the conference days count as deductible. To maximize your deduction, you can also structure your trips in a way where you’re there for business before and after the weekend and that may allow the weekend days to be deductible as well!
Deductible Travel Expenses: What You Need to Know
Let’s talk about some common business travel expenses that may be eligible for deductions:
1. Transportation Costs: Whether you’re traveling by air, train, bus, or using your personal vehicle, you can deduct the costs of transportation when it’s for business purposes. If you use your car for business travel, you have the option to deduct either the actual expenses (fuel, maintenance, etc.) or use the standard mileage rate set by the IRS.
2. Lodging and Meals: Reasonable expenses for accommodations and meals during your business travel may be deductible. Keep in mind that the IRS imposes certain limitations, so excessive or lavish expenses might not qualify. It’s essential to maintain receipts and document the business purpose of your lodging and meal expenses.
3. Other Travel Expenses: In addition to transportation, lodging, and meals, there are other travel related expenses that you may be able to deduct. These can include expenses for taxis, rental cars, baggage fees, internet access fees, tips, and other similar expenses directly related to your business activities. Again, documentation is key to substantiating these deductions.
Documenting Your Deductions
Proper documentation is crucial when claiming business travel deductions. The IRS requires you to maintain detailed records and receipts to support your deductions. Here are some essential records you should keep:
→ Travel Itineraries: Maintain copies of your travel itineraries, including flight/train tickets, hotel reservations, and any other transportation arrangements. These documents provide evidence of your travel dates, destinations, and the purpose of your trip.
→ Receipts and Invoices: Keep receipts for all expenses related to your business travel, including accommodations, meals, transportation, and other relevant expenses. Make sure the receipts clearly indicate the date, the item or service purchased, and the amount paid.
→ Contracts and Agreements: Retain copies of contracts or agreements with clients, sponsors, or collaborators for content creation or other business activities during your travel. These documents serve as proof of the business purpose of your travel and the specific obligations you had to fulfill.
→ Content Documentation: If your travel is related to content creation, document the content you produced during the trip and its connection to your business. For instance, if you’re an influencer and you traveled to a beautiful location for a photoshoot, keep records of the content you created during the trip. Read more about deducting content creation travel here. ←
→ Communication Records: Preserve relevant communication records, such as emails or messages, with clients, sponsors, or other individuals involved in the content creation process. These communications can help demonstrate the business related discussions, negotiations, or instructions regarding the travel and content production.
→ Social Media Analytics: If you’re claiming content creation as a deduction, gather analytics data from your social media platforms, such as engagement metrics, reach, or impressions for the content produced during your travel. These statistics can provide additional support for the business purpose of your travel and its impact on your brand.
→ Travel Logs or Diaries: Maintaining a travel log or diary can be beneficial. Jot down the purpose of each day’s activities, the locations you visited, and the tasks you accomplished related to your content creation. These personal records can serve as supporting evidence when explaining the business purpose of your travel.
Remember to organize and store these documents in a safe and easily accessible manner. Digital copies or cloud storage can be helpful for record keeping purposes.
Want to Understand the Rest of Your Tax Responsibilities?
If business travel is confusing, you’re not alone. Most new business owners were never taught the basics of business taxes, deductions, what “counts,” or how quarterlies work.
If you want a simple, friendly overview (no jargon, no overwhelm), download my free guide:👉 The Tax Basics Every New Business Owner Should Know
It gives you a simple overview of income tax, self-employment tax, quarterlies, and what the IRS actually expects.
If You Want to Go Deeper…
Understanding travel deductions is one piece. The next step is knowing how much to save for taxes, whether you owe quarterlies, and how to avoid surprise bills.
If you want step-by-step help:👉 Know What You Owe: A Step-by-Step System for Quarterly Taxes
Final Thoughts
Travel deductions can absolutely save you money, as long as the trip has a true business purpose and you keep solid documentation. Once you learn the basics, this becomes something you can confidently handle year after year.
You’re doing great — and you’re already ahead by learning this stuff.
