Travel expense accounting is important
My article yesterday on the risk of tax and/or social security audits generated some feedback. This shows me that the topic has surprised some and that it is worth sharing the topic more on social media.
As I mentioned briefly, there are many related problems and risks, which, of course, in the broadest sense also have to do with taxes and social security. While you can also get some things wrong with catering documents (if I’m interested, I’ll also make my own article), here the amount in the room is still quite limited. As a rule, as a self-employed (or small start-up) you will not have thousands of euros in costs for catering per month.
In another case, this may be different, namely for business trips, which one would also like to claim as operating expenses on your income tax return. This starts with trips to conferences or trade fairs, goes over flights to events of partner companies and ends with trips to customers or agencies.
A lack of travel expenses is like burning cash
If you get travel bills right, it can bring you a lot of money, because the so-called extra food costs can quickly exceed the actual cost of food, as well as things like taxi rides, hotels, even tips in addition. However, this requires correct travel expense reports, which carefully indicate the exact amounts, the cost centres (from which account, from which budget, etc.), the day of the trip and, above all, the purpose of the trip. The last two things are often the crux of the matter when you look closely, or if at some point, after two years or something like that, the auditor looks closely. It is then necessary to ensure that the purpose of the trip is specified precisely, sometimes also the activities on each day, and that it is precisely stated why the trip was initiated by the company. The latter must also be proven to the examiner in case of doubt. Otherwise, the full costs will eventually be eliminated and can no longer be claimed. Practical note: After two years, you usually don’t know what exactly you did on individual days!
But beware of the self-employed!
A particular sticking point exists mostly for the self-employed: the mixing of private and business purposes. The tax office examines this separation very closely (especially if an auditor wants to find something to justify his activity), because the auditor also knows how easy it is to combine holidays/sightseeing and a conference in London. Evidence of this is often enough, if you are just looking, also available. Many people post frankly, on Facebook or other social media channels, when you’re experiencing something great in a city. One should therefore take careful care to pick up and sort all receipts (in the case of thermal paper, make sure that it is bleached after a year or so!). Trade fair invitations, schedules of a seminar, or the minutes of a meeting should best be pinned directly behind the travel expense statement.
It gets tricky with a real mixture of the journey. While hotel costs, entrance to a trade fair and the like are still easily attributable, travel expenses would be harder to separate. There must be an appropriate distribution of costs here, which could, of course, lead to differences of opinion with the examiner.
The other receipts are often muddied, be it parking fees, tolls and many smaller things, for which there is often no receipt at all, or no receipt that meets the requirements to claim a VAT refund. But that’s just stupid. Careless action simply costs money here. Then you can also burn banknotes.
Conclusion
As with all things about accounting, taxes, documents or government communication, a care that is often unwelcome helps to save real money. A system should be developed for archiving, storage and creation of travel expenses, including all documents. The effort will be worthwhile!
