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Good budgeting is essential for businesses of all sizes. Without proper budgetary structure, your business will struggle to survive and is unlikely to expand and grow organically.
To facilitate growth and expansion, most businesses try to strike a balance between investing in such growth and curtailing expenses. Particularly when it comes to budgeting for travel and entertainment expenses, it can be difficult to distinguish between essential expenses and unnecessary and wasteful expenditure.
Why Your Business Needs a Travel and Entertainment Budget
To promote growth in your business, you will need to look after potential clients. You may have to travel, invite contacts for dinner, or even bring current customers to a show to foster a strengthened, long-lasting business relationship.
Naturally, some of these expenses will be incurred by your staff, as you are unlikely to be able to do all the traveling and entertaining yourself. Setting clear travel and expense guidelines for staff members is crucial. Not only do you protect your business by doing so, but you also help your staff to use company funds wisely rather than frivolously.
Deductible Travel and Entertainment Expenses
A certain core number of travel and entertainment expenses are tax deductible as long as you and your staff keep records and receipts. These deductibles include lodging, transportation and meals and may also cover bringing clients to a sporting event or entertainment show. Some companies provide their employees with company debit or credit cards, while other reimburse staff members when they present relevant receipts.
All of these expenses appear in the company accounts and can be listed as expenses, along with all other traditionally incurred costs. As such, they become tax deductible and this reduces the actual cost of travel and entertainment.
Is it Wise to Give Your Employees a Company Credit or Debit Card?
Though you may be reluctant to trust your members of the staff enough to give them a company debit or credit card, these cards are actually a great way to keep an eye on spending. All expenses are itemised on the bank statement or credit card bill, and employers can easily check and verify the legitimacy of each item.
If one of your employees abuses the system and, to give you an example, plays Warlords online slot on the company credit or debit card, you will know when you examine the company credit card bill or debit card bank statement. The vast majority of employees will not spend recklessly. They know better.
It’s undoubtedly worth investing money in travel and entertainments, simply because it means you are looking after current and future customers. Sit down with your accountant to determine your annual travel and entertainment budget. She/he will be able to tell you what your business can afford and how best to turn this type of investment into company profits.
The Importance of Keeping Records and Holding on to Receipts
Give each of your traveling and entertaining employee an expense sheet to fill out. There, they can list all the expenses. Keeping receipts is absolutely necessary if you want to include the money spent on travel and entertainment in your annual accounts.