Vacation Like a Business Owner
I’m heading on an extended personal vacation soon and am so looking forward to time with my best friend, my wonderful wife of over 10 years, Wendy. Some of our kids are joining us as well, and we’re certain to spend some fun times together, building great memories.
But I’m really not just going on a personal vacation, and that’s because a wise and appreciated business mentor once told me, “Never go on a personal trip anywhere without holding a business meeting or organizing appointments with current or potential clients.” In other words, turn your personal trip – and many of its accompanying expenses – into a business trip.” Why? If you’re a business owner, many of the expenses (travel, some lodging, some meals, etc.) may qualify as tax deductions, effectively lowering your annual taxable income so that you pay less in taxes at the end of the year. Plus, it’s a chance to build your business.
It’s important to understand that I’m not an accountant and am not giving tax advice. I’m simply saying that we need to travel like a business owner. I’m not advocating to frivolously grab someone’s business card and call your vacation a business trip because you made one new contact. That is pretty disingenuous and not-so-warmly viewed by the IRS. Instead, try to create legitimate business opportunities while traveling, while at the same time organizing the trip to enjoy time with your loved ones.
What if you’re headed to a family member’s home for a visit? How could that be a business trip? I don’t know what his primary motivation was, but during many of our family vacations when I was growing up, my father – a retired optometrist – provided many eye exams for friends and relatives in my grandmother’s back room in the small, rural town she lived in (a 14-hour trip from our home).
Here are a few things to consider:
- First, you should actually BE a business owner or partner, even if it’s just a part-time gig. Establishing an LLC, for example, is pretty simple and affordable in most states. Check out the Small Business Administration’s step-by-step guide to setting up a business at www.sba.gov/category/navigation-structure/starting-managing-business/starting-business. If you need ideas on what type of business to start, I like the list at www.thesimpledollar.com/50-side-businesses-you-can-start-on-your-own/ as a starting place.
- Try to plan your trip with a business owner mentality. What can you do while you’re traveling that could possibly help your business, improve your professional skills or build your clientele? Are there current or potential clients to meet or consult with? Could you take a continuing education course that you might need for certification or licensing? Why do you think so many industry associations hold their conferences and conventions in destination resort areas like Orlando, Las Vegas, New Orleans, or Miami? “Come for the classes… Stay for the fun!”
- Document it. Again, this is not coming from an accountant, and you can’t deduct personal expenses even while on a business trip, but when I combine personal activities with personal business, I make sure to document and keep for my tax records everything that is business related: receipts, meeting notes, business cards, course materials, conference agendas, description of business travel results, etc. Here’s a great IRS page on business travel, including what can be and what should not be considered tax deductible: www.irs.gov/publications/p463/ch01.html. Bankrate has another good post on the topic at www.bankrate.com/finance/taxes/tax-help-for-business-pleasure-trips-1.aspx.
With a little forethought, you might just cut your personal vacation expenses dramatically while also promoting your own business, no matter how big (or small) it is.
Have a great week, and bon voyage!