Shopify and Amazon brand owners: How to deduct your business travel expenses
June 20, 2023
June 20, 2023
Want to mix business with pleasure? Meet these 4 requirements to deduct 100% of qualified business travel expenses
As a Shopify, Amazon or ecommerce business owner, you spend a lot of time sitting behind your computer screen, working as hard as you can to increase your revenues. But when you do travel for business, conferences, to meet wholesale customers, and scope out new suppliers, did you know if you plan correctly, you can actually get a vacation subsidized by Uncle Sam?
Grab your bathing suit and let’s dive in…
You can deduct 100% of qualified business travel expenses, even if you spend time on R&R and if you meet these 4 requirements:
1) You leave your main place of work for more than 1 workday
This one is pretty straightforward, so pack your toothbrush and an overnight bag!
2) The trip is ordinary and necessary for the business
Having pre-scheduled work events? Good
Traveling for vacation while throwing in a spontaneous working lunch meeting? Not so good.
The intention of the trip needs to be for real business purposes.
3) You must spend ‘enough’ time on business to deduct trip expenses
How much time exactly do you need to spend on business? The rules are different for US vs international travel
For US travel: Spend the majority of days dealing with business.
For international travel: Spend at least 25% of your time on business or you were outside the US for less than a week on a business trip.
So let’s say you travel for a full seven days—you’ll need at least four days on business to get any travel deduction.
Remember, travel days also count as business! BUT, spending four days on work and then extending the trip for vacation, won’t get you a full write-off.
Here’s how it works:
In example 1 above, you extend the trip to include vacation, so
Business days + travel are ordinary & necessary = Write-off!
However, extra hotel costs + meals for extended vacation = No write-off
BUT, if you stay for valid business reasons, you can enjoy some time off and still get a full deduction for your business trip.
4) Qualified travel expenses only
Remember, expenses must be ordinary & necessary, so no buying penthouses or Ferraris on the company’s dime!
The following is a list of qualified travel expenses:
Cabs, Ubers, rental cars
Lodging - Hotel and Airbnb
Meals (usually a 50% deduction)
Essentials - dry cleaning, laundry, wifi fees, etc.
Rule of thumb: Keep all lodging receipts, and any other receipts over $75.
What if you bring a plus one?
In this case, expenses you would spend anyway, you can still deduct. If you pay extra for the plus one, like an upgrade to a double room, only deduct the cost of the single room.
Note to you digital nomads out there
A travel deduction only works if you travel for work away from your set home or place of work. If you have no set home or place of work, you likely won’t be able to get a deduction for your day-to-day travels.
Expenses can be pretty tricky especially when it comes to ecommerce accounting and ecommerce bookkeeping, so make sure you plan correctly and know exactly what you can and can’t deduct!
Use Finaloop’s AI accounting and AI bookkeeping to help you manage your expenses through accurate and real-time financials.
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*The information provided on this website does not, and is not intended to, constitute legal advice. All information, content, and materials available on this site are for general informational purposes only. Readers are advised to consult with their attorney or accountant with any questions or concerns.*
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