We know that corporate travel can involve significant expenses for your company, which is why we have prepared the following content on deductible travel expenses. In this way, you will be able to maximize the resources you allocate to this type of process.
In addition, you will have all the tools and resources you need to identify deductible expenses and maximum amounts, in order to enjoy the tax benefit.
Read to the end!
What are deductible travel expenses?
Deductible travel expenses are all those expenses that can be subject to tax deduction for your company.
This not only means that they may be beneficial, since they will subtract an amount from the taxes payable as a company thanks to the tax credit, but they can also help you build a favorable corporate and financial reputation.
Why should deductible travel expenses matter to you?
By identifying and recording all expenses of this type, the accounting and finance department will be able to reduce the total costs incurred in travel, thereby achieving that budgets can slightly widen their margin.
This will be beneficial not only to improve the experience for those who have to make a corporate trip, but it will also allow you to have better potential solutions for unexpected crisis scenarios.
This will improve the performance of your resources and you will be able to obtain better corporate results, since you will increase the productivity of your workers and boost the margins of success of your objectives.
How to optimize the management of deductibles and travel expenses in general?
However, while there can be many benefits to taking advantage of these types of expenses, identification can be somewhat problematic if you do it on your own: you could be wrong and have to pay a penalty due to issuing an unnecessary invoice or miss the opportunity to deduct some major expense.
To avoid this type of incident, you can contact a travel management company (or travel management company). The professionals that you will find here will be able to recognize with certainty all the corporate travel expenses that are deductible for your company.
Another option, which we will address later, is to implement a comprehensive system for recording and managing expenses.
This type of resource will streamline the management of your trips in other areas that are just as relevant, such as logistics: from plane and hotel reservations to scheduling meetings with partners and clients or solving eventual problems.
In addition to external support, you should consider the following:
Technical elements and contextualization
In the first place, it is necessary to define those in charge of planning all the technical details that allow corporate trips to be made: this includes everything from the reservation of plane tickets, hotel accommodation, restaurants and mobility of employees in the established location.
However, this is not reduced to a simple exercise of quick search and reservation in airlines and other establishments, it requires research and comparison of different suitable alternatives for the purposes of the matter for which the trip is made.
This in a practical way can translate into which hotel is most convenient for an employee who has meetings and conferences pending in the center of the city to visit. Specifically, it will not generate greater benefits for the company to choose the most economical lodging option that is located on the shores of said city.
Corporate travel policy
Additionally, good corporate travel management contemplates the creation or improvement of a business travel policy that will allow the company and its workers to more easily comply with protocols and financial expectations.
This type of resource will facilitate the necessary reservation of tickets and will also make it possible to speed up mobility and transfers, as well as improve the experience of workers by implementing a participatory scheme that seeks feedback before, during and after a trip.
In addition, a document such as the corporate travel policy, commissioned from a specialist from a specialized company or from an expert independent consultant, must also contemplate the possibility of crisis and various resolution options.
This is what is known as risk management and it is essential to manage the unforeseen events that may arise during an event such as a corporate or business trip.
With this early action, unplanned issues and issues can be resolved much faster and have less impact on the traveler experience and the corporate mission for which the trip was made.
That is why it is necessary that when choosing a service or consultant for the management of your trips, you know about the type of risk management that it carries out and the tools that it proposes to manage potential crises.
Monitoring and recording of expenses
This type of monitoring usually requires specialized services such as databases hosted in cloud services that facilitate the collection of data on expenses made from any authorized device.
It is important that there is a reliable record of deductible travel expenses, but also of those that are not deductible, in this way it will be easier for the consultant or service you hire to manage your trips to generate a complete report for the department finance and accounting of your company.
For this purpose, a solution like Concur Travel can be convenient, so you can keep track of all expenses and easily classify deductibles and non-deductibles.
Difference between travel expenses and mobility expenses
Now that you know that going to a specialized company or professional will help you make the most of the benefits of this type of expense, and that you also know some of the basics of travel management, it’s a good idea to learn more about the differences that they have travel and mobility expenses, since in this way you will have a clearer idea of which may be deductible.
The latter above all because incorrectly declaring can be very problematic and can also reduce the margin of optimization of resources for your company (mobility expenses have a different limit than travel expenses).
So, we make things clear to you: travel expenses cover all the resources used to pay for a trip for business purposes, they can include the transportation expenses that a corporate trip implies, but these should not be confused with mobility expenses.
Your company’s mobility expenses are related to the distribution of your products or raw materials or those that involve short-distance transportation.
So, what are the main travel expenses?
For their part, travel expenses include transportation expenses such as plane tickets, buses, cruise ships, and others: they are long journeys and imply mobility outside the area where workers normally work.
In addition, they include other expenses such as lodging or lodging and food. In order for you to have a record of all the expenses in their different categories available, we recommend that you have digital tools in your financial control .
In this way it will be easier to compare each of the financial movements, which will facilitate the work of the specific department or external accounting and finance consultants.
After all, even if you have the support of a specialized finance company to handle this aspect, using digital tools will make it much easier for you to manage each movement quickly.
Deductible travel expense limits
As we briefly mentioned in the previous section, deductible travel expenses have a limit that must be respected both when traveling within the country and abroad.
According to current legislation, deductibles must not exceed twice the amount that is authorized for higher-ranking public officials per day in the case of travel within the country (or $640 per day).
For its part, when it comes to travel abroad, the maximum limit will be calculated based on the per diem scale by geographical area, positioning the minimum amount in government agencies at USD$315, for the Central American region. , and USD$540, as the maximum, for the European region.
In this way, companies cannot exceed twice the amounts that we have just mentioned. To keep a clear record, you can use a digital tool and rely on the work of a specialized company that will allow you not to exceed the amounts mentioned.
It is important to take these amounts into consideration if you are looking to maximize the resources used by your company. In addition to this, it is essential that you consider the basic information required by the documents obtained to make the deduction.
For this last reason, we present the following section in which you will learn both the necessary documentation and the most appropriate formats so that the deductible travel expenses are really valid.
Documentation necessary to present deductible travel expenses
In order for you to deduct travel expenses, you must have a valid invoice for the services and also specifically state why these expenses are related to your business.
This means that it will be necessary to state why the trip was made, in the case of the invoice for a stay or plane tickets, and what is the importance and connection it has with the business.
Basic information in tax documentation
Other important elements for these documents to be valid have to do with the data that is included in the invoices where at least they must appear: name, denomination or company name, the address of the service provider, the nature or object of the operation, date and amount thereof.
It is essential that the name and official identification number be found, right in the fields for this information, otherwise the document will not be valid and it will be impossible to deduct the amount allowed for this expense.
Type of documents accepted and formats
It is also necessary to point out that the type of document accepted includes: electronic sales receipt, POS ticket, electronic purse ticket, electronic debit or credit note.
In the event that you cannot have this type of document, you may present a physical sales receipt or a debit or credit note issued in printed form or imported by authorized printers.
Do not forget that these last documents are accepted in particular cases, since the norm usually prefers the electronic format for any receipt that is issued for the purpose of deducting expenses.
This is not by chance, since digital issuance generally facilitates the registration task for all parties involved: from SUNAT to the financial and tax relief service platforms used by specialists and professionals in the area.
That is why it will be convenient for all travel expenses to be covered by a valid debit or credit card and through digital platforms.
In addition to this, it is important that you have the required documentation that proves that the travel expenses presented are really necessary for the operation of the company.
These can be trades or letters issued and duly signed by the company’s authorities to prove their validity. In turn, it must establish in these documents that the amounts of the tickets were authorized by the general meeting of shareholders.
Expense control tools
Once you know the essentials about deductible travel expenses, it is important that you remember the benefits that technological tools or solutions will bring you.
Hand in hand with a good manager or consultant, they can help you generate optimization of resources and considerable corporate financial improvement. Some of the most useful tools are the following.
Accounting Classification Tools
With this type of service you will be able to keep a financial record of all your movements. In this way, you will not only have reliable support that shows the expenses of your trips, but you will also be able to consult the profits and economic balances of your business.
These types of tools will improve the performance of your company’s accounting department and will also allow you to resolve any questions or clarifications related to these areas (whether they are suppliers or customers).
It will also be very helpful when you are making a general report on the financial situation of your company, which will facilitate the confidence of potential partners that strengthen your reach in the market.
It is another solution that can be very useful for the accounting department of your company. It will make the tasks of those in charge easier, since it will allow them to automate processes that would otherwise take more time.
This will result in the workers responsible for accounting being able to focus more on improving the balance sheet as billing tasks will be much easier and the registry will also have reliable and fast backup.
These programs will also be very useful to record all deductible travel expenses and make the procedure with government departments much more agile.
Tools to create budgets
This type of program or platform will be very useful for your expert travel manager or consultant and also for anyone who is in charge of managing resources.
The latter above all because it will allow minimum and maximum limits to be established that can be communicated in a much more direct and quick way thanks to the environment on which they are based.
Concur Budget is one of the alternatives and uses a cloud-based environment, so it will not only be easy to know the minimum and maximum amounts in a budget, but it will also be easy to monitor expenses in real time.
It will also be useful for all the heads of departments in your company, who are in charge of acquiring inputs and other elements that require expenses in your company, which on a large scale will facilitate the financial work of your company.
Expense Management Tools
They are a great solution for the financial department of your company. Not only will it allow you to keep track of all expenses, but it can also be the focal point of all your company’s budgeting and financial information.
One of the options for this type of tool is Concur Expense , which will not only make it easy to keep track of all expenses safely, but will also provide you with automated reports to generate detailed analysis of the financial situation.
This solution will allow faster and easier reimbursement to your employees when the case arises and will help you to generate an expense policy more easily.
In addition, you will be able to access graphic reports that will facilitate the creation of presentations and reports of your company. This will generate greater confidence in potential partners and customers and increase the commercial reach.
Financial Protection Tools
Finally, there are the tools that will allow you to shield your company from any possible economic fraud.
Although at first glance it may seem that they are not related to expense management tools, the truth is that preventing theft is one of the most important tasks of expense management. After all, fraud or theft is a waste of your resources.
For these types of solutions, Concur Detect offers everything you need to keep your company safe, so you can minimize the chances of financial fraud and keep your company in good financial health.
Conclusion: aim for smart management
Knowing what you need about deductible travel expenses in conjunction with the work of a travel manager and the use of tools that help you record and manage your expenses, will allow you to achieve better performance on each trip.
You will be able to offer better travel experiences to employees, which will undoubtedly positively impact performance and satisfaction in daily work.
It will also make it easier for you to manage and classify expenses, which will allow the accounting department to do a better job and also improve financial productivity. This will not only be appreciated by your accounting and finance departments, but also by your partners and your corporate reputation.
Get closer to one of the companies or technological solutions: they will allow you to achieve these gains and also have greater control of the receipts and documents necessary for corporate trips to become a tax opportunity for your company.