Deducting Business Travel Expenses

If you have to travel for your startup and it is covering the costs, the business may be able to deduct the costs of the trip, such as airfare, car rental, hotel, food, and even entertainment (if it is directly related to the business, such as taking out a client). However, it is important to remember what exactly the business are permitted to deduct. First, you can only deduct the costs of yourself and any employees who have come along for the business of the trip — the business cannot deduct the costs of friends or family who come along simply for the trip. Furthermore, simply commuting to your place of work really doesn’t qualify as a trip (if the business is paying for a monthly subway pass for someone to commute to the office, it might actually qualify as income to the recipient). The only guidance the Internal Revenue Code provides for what can be deducted are travel expenses that are “ordinary and necessary”. Basically, use common sense — if it actually isn’t related to the purpose of the business trip, it isn’t deductible. The cost of the hotel room is deductible, you meal with a client is even deductible (both your portion and the client’s portion), but a souvenir is not.

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