As a small business owner, you may occasionally need to take a business trip or send your employees on one. While you shouldn’t travel frivolously, you also shouldn’t hesitate to travel in cases where it may benefit your business.
This includes conferences and conventions, meeting with prospective clients, attending out-of-town training sessions or networking events, and similar types of activities. As you plan these trips, keep the following tips in mind.
Strategies for Saving
If you travel relatively infrequently, use travel websites such as Travelocity or Flight Centre to help you find deals. If you travel on a regular basis, join a loyalty rewards program for frequent travellers. For example, instead of taking a different airline each time you fly, take the same airline and reap frequent flyer miles. Similarly, always try to stay at the same hotel chain and use its loyalty rewards program.
This approach saves you time – you don’t have to look for new airlines or accommodations for each trip. In some cases, you may spend more on each individual journey than you would have if you took the time to find a great deal.
However, the overall savings you earn through the rewards programs helps to smooth out the difference. Also explore other strategies for saving money, such as shopping for meals at local grocery stores instead of eating in restaurants or having employees share hotel rooms instead of having their own rooms.
The Canada Revenue Agency allows you to claim a business deduction for the cost of business-related travel. In particular, you may write off 100% of public transportation fares and hotel accommodations, but you may only write off 50% of the cost of food or entertainment. Similarly, if you pay for your employees to travel, you may deduct the same expenses on your tax return.
In addition, if you travel to a convention, you may write off the convention fees up to twice per year. If you require your employees to travel and cover their own expenses, they may write off these expenses on their personal income tax returns using Form T777. However, you must fill out a Form T2200 stating that you require your employee to incur these costs as part of their jobs.
What are FX Fees?
Every time you use your card while in a foreign a foreign transaction, or FX fees, are added to each transaction. If you used your credit card for most of your transactions, all those fees can add up. Understanding FX fees and how to avoid them is a great way to save money anytime you go to another country for business travel.
How FX Fees Work
An FX fee is a fee charged by your credit card issuer for any purchases you put on that card while you’re in a foreign country. If you buy something online from a company in another country that handles transactions in a different currency, your card issuer could also charge you an FX fee for that.
While FX fees vary by card issuer, the standard amount is 2.5%, and the fee is often combined with the original price of the transaction on your monthly statement. You can find the exact amount in the terms and conditions for your credit card.
FX fees have become less popular in the United States, with many popular cards offering no FX fees, but they’re still commonplace in Canada. One reason why is that Canadians travel more than Americans, with 67% of Canadians having passports and only 36% of Americans, making FX fees a much larger source of revenue for card issuers here.
It’s important not to confuse FX fees with currency conversion fees. Some businesses offer to convert a purchase from their currency to your own. Since you’re still making a foreign transaction, you incur the FX fee even with currency conversion. It’s generally best to decline any currency conversion offers, as you get a better conversion rate through your card issuer.
Avoiding FX Fees to Reduce Business Travel Expenses
Credit cards are ideal for business travel, as they offer consumer protections and help you avoid carrying lots of cash around. FX fees can eat into your budget, though, making it best to choose a credit card without them.
While most Canadian card issuers charge FX fees for business travel credit cards, you can find a card with no FX fees if you shop around. Make sure to account for any rewards a card offers, as these can offset fees.
For example, certain cards have FX fees but also earn a cash back rate on foreign transactions that’s greater than the fee.
Try to apply for a card with at least a month or two to spare before your next business trip. It can take some time for the card issuer to process your application and get your card mailed out to you, and it takes even longer if you get declined for one card and need to apply for another.
If you’re unsure how good your credit is, you can check it by requesting free credit reports from Equifax Canada and TransUnion Canada.
As consumers flock toward credit cards with no FX fees, these types of cards should become more common. Until then, there are a few options available to make international travel easier on your wallet.
To make these claims on your tax return, you need to have records and receipts of your expenses. Whether you are travelling on your own or sending your employees out into the world, consider utilizing an expense-tracking app.
Depending on the app you select, you may be able to take a picture of receipts, track mileage with GPS, upload receipts, or perform other functions that make it easy to organize your travel expenses.
Choose an app with the features that meet your specific needs. For example, if you want employees to pitch travel ideas and submit purchase order requests, you need an app that can facilitate that. Similarly, if you want to track travel spending, look for an app that can generate those types of reports.
QuickBooks Online has a built in expense tracker that will allow you to stay on top of your related travel expenses. You can connect all of your accounts, access a receipt scanner, and use automatic sorting to make completed your taxes even easier. Over 6.5 million people are using QuickBooks, join them today.