4 Ways To Reduce Business Travel Expenses
After payroll, travel expenses are the second most controllable business expense. Learn to reduce business travel expenses, and you can save your company money and increase the bottom line.
One of the easiest ways to reduce business travel expenses is not to incur them. Thanks to videoconferencing or other Web-based technologies, you may find it possible to meet with prospects and business associates without having to travel.
But still, travel is an inevitable need for most businesses at some time or another. When it is a necessity, explore your options. Look for travel discounts and skip the luxuries. Would you (or your employees) be willing to drive instead of fly? Can you schedule trips during the off-season for additional savings?
And, see if you can strategize travel plans to hit several locations in the most cost-effective and time-saving way. It may make sense, for example, to combine what could have been two or three separate trips into one, hopping from location to location.
Make Your Own Travel Arrangements
There are many online options to help you make inexpensive travel arrangements, from reduced ticket prices to low-cost hotels and budget car rentals. Use discount sites, online travel agencies and meta-search engines to book your own travel. And take advantage of savings opportunities like frequent flyer miles, discount plans and other promotions from airlines, hotel chains and car rental companies.
Monitor Your Travel Expenses
The best way reduce business travel expenses is to know exactly what you’re spending. Always check multiple places and consider alternatives before locking in your plans.
- Keep track of expenses and make sure employees are properly accounting for their costs. If your company does extensive travel, use business credit cards that give cash back or generous (and easily usable) frequent flyer miles to save money over time.
- Sometimes an extra night's stay may save money through cheaper airfare. If travel days are flexible, always look for prices within a day or two of your target travel days.
- Downgrade from business to coach, which can be a big cost saver. In cities with more than one airport, check which one offers the better fares.
- Re-check prices after you’ve booked when using a retailer that guarantees you the "best price."
Tax deductions are another way to save money. For instance, every dollar you deduct can save you 25 cents if you’re in the 25 percent tax bracket. But you must follow strict rules in the tax law if you want to deduct your travel expenses. Keep good records of each trip in accordance with tax rules (recordkeeping for business travel expenses is explained in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses.
If your employees travel on company business, be sure to use an “accountable plan” to reimburse their costs. This can help to avoid treating reimbursements as compensation to employees and save the company payroll taxes that would otherwise be due on such compensation. Accountable plans are explained in the same IRS publication mentioned above.
The bottom line is: A little effort can go a long way to reduce business travel expenses without harming your business activities.