Ah, business travel. Like or loathe it, business class or cattle, you will most likely end up doing a lot of it this year. So let’s look at ways to create an accountant friendly, money-saving company travel policy.
First off, accountingdepartment.com co-founder Dennis Najjar recommends setting out guidelines at the start of the year so that everybody knows what’s permitted, and what isn’t. Who gets to ride a taxi to Heathrow, for example, and who gets to ride the Piccadilly line all the way from Holborn to Terminal 5?
Najjar also recommends assigning each trip to the appropriate cost centre, be it the project, client or services division, for example – this is very important when it comes to allocating your costs.
“Smart companies book only refundable flights”, he says, because “change is inevitable”, and, crucially, “changed and cancelled flights must be recorded in your books as prepaid expenses. But make sure you track these carefully – unused flight credits must be written down after they expire, and cost-allocation adjustments made if a “credit is used for a different client than originally planned.”
How do you want to treat your frequent flyer miles? Do they belong to the company, or to the employee? Frequent flyer miles, at least in the US, are not treated as taxable income so no need for the employer to factor in payroll taxes on them. On the other hand, an employee cannot recoup the full price of a flight if they used their frequent flyer miles to pay for some or all of it.
Want our advice? Thought so! Very simple – note every cost you incur down somewhere very obvious, and, natch, keep your receipts. And we mean really keep them – coffees, beers, sandwiches, a ludicrously expensive 50 ml can of tomato juice on the flight – just do it, and don’t worry about how petty it can sometimes feel – everybody good does it.
One thing a fledgling business can simply not afford to do is let money slip through their fingers, or miss out on handy tax loopholes. Ultimately it may be your accountant who finds the savings, but without the evidence, you are handing them a pistol with no bullets – and they will probably hit you over the head with it, dummy!
If you want an accountant who respects you, and in business this is very important, then you need to know your books even better than they do.
Call it the first rule of business, if you like. A whole years’ worth of saved travel receipts might just get you that Business Class upgrade to the biggest meeting of your year. Who wants to face that an hour after stepping off the cheap seats on the Redeye to NYC, sandwiched between a screaming child, and a man with body odour issues. Not us!