October '21

Issue link:

Contents of this Issue


Page 77 of 103

72 THE SHOP OCTOBER 2021 SPECIAL REPORT: TRADE SHOWS CAREFUL RECORDS Despite the elimination of the entertain- ment deduction, there are still many legiti- mate deductions available to business trav- elers. And while they certainly soften travel's bottom line impact, keep in mind that the system only works if you record and retain the requisite backup documentation. "Travel expenses, especially those for meals, are very often low-hanging fruit for auditors," says Rhodes. "That's because many people fail to keep adequate records." If your paperwork does not support your deductions, they can be taken away. In addition to the increased taxes that will result, there may also be penalties and interest payments. So, how can you track your expenses in a way that will satisfy the authorities? The tried and true medium is paper—and many people still keep folders bulging with receipts. With the arrival of the digital age, things can be a bit easier—at least for anyone comfortable with technology. "Smartphone apps are especially valuable for keeping receipts of your meals," says David Cawley, partner and certified valua- tion analyst at Fraim, Cawley & Company, CPAs, Roanoke, Virginia ( "You can just take pictures of your receipts and store them in a database." Alternatively, you can have vendors email receipts to your smartphone. Then file the emails in a folder, which is easier to access— and to back up—than faded paper files. (See sidebar, Apps That Track Expenses.) Once you have your records in hand, hang onto them. "The IRS can go back three years when auditing your returns," notes Flemming. "If they find anything, they can go even further back than that. So, we recommend keeping documentation for seven years, which is as far back as the IRS can go." When it comes to state law, Flemming cautions, the rules can be more onerous. Montana, for example, can go back 10 years. "Find out what the rules are in your own state, because each one is different." Bonus tip: "Consider charging all of your business expenses on a dedicated credit card," says Cawley. "You'll have a perma- nent record of where you went and how much you spent." And that credit card's statements will provide an easily accessible journal of your business activities. PER DIEM RATES Does collecting meal receipts—digital or otherwise—seem like a hassle? Ask your accountant if you're eligible to utilize per diem rates—daily cash amounts that are set by the government. "Each year the IRS comes out with a per diem rate for each geographic area," says Cawley. "The rule is that you can either deduct your actual expenses in terms of meals and incidentals or just use the per diem rate, based on how many days you are there. You should track both in tandem, Apps That Track Expenses Hate stuffing bags with paper receipts and jotting indecipherable notes in journals? Try using these electronic expense trackers that are as close as your smartphone: • Reads key details from receipts when you snap them with your smartphone. Store data online or export it to your computer. Pricing starts at $10 monthly. • Automates expense accounting from receipt scanning through final reports. Pricing starts at $5 per month. • Runs in the background to track mileage. Creates a compre- hensive travel record. Basic version offers 40 free drives each month. Tracking your travel expenses when you attend a trade show can really pay off. Trade Show Tax Deductions

Articles in this issue

Links on this page

view archives of THE SHOP - October '21