How is my recent trip a tax deduction?

Hey everyone. Took last week off. My wife and I just got back from Costa Rica and we were celebrating our 15-year anniversary. Pretty remarkable, I think, that my wife has put up with me for 15 years. So anyways, Costa Rica was awesome. And I wanted to talk about how my trip was a tax deduction and the way that I have fit that into managing my cash flow when it comes to a private So first things first, we have some friends, and me and this friend decided that we should hold an annual— our annual company meetings in conjunction because he works with dentists on valuation and helping them buy and sell practices. And we do bookkeeping stuff, which a lot of his dental clients who buy things may need. And so we felt, you know, we should collaborate as a business. So we decided to take a trip. Business purpose to the trip— that is what I just explained. Then we reached out to a travel agency, Spears Travel Group. Uh, they're phenomenal, for the record. Um, I don't know if you know this— I didn't before I met Ryan Spears Um, and, and got to know what his company does. You don't actually pay the travel agent. The travel agency gets compensated from the different resorts that they sign you up on. So Brian and I laid out to the Spears Travel Group and said, we want to take a business trip, um, and here's our criteria. We're looking for basically, you know, 5 to 6 nights, and we want it to be someplace in the Caribbean. And so we laid out a bunch of factors and they came back to us with some options. And then based on our budget pricing and what they suggested, we ended up choosing to stay at a resort in Costa Rica called Nayara, which is in the rainforest. I love the rain. It was freaking amazing. But anyways, so we had business purpose first, then we planned the actual trip. Before we started spending money. If you're audited for tax purposes, that is what the IRS is going to need to see, that you had the purpose before you made the trip. I can't just drive down to Southern California and go to Disneyland and then later say, oh, that was for business purpose. I would need to be able to show the IRS that there was business purpose in going to California first, and then it just so happened on some of my time off from the business activities that we went to Disneyland, which after tax reform of 2018 isn't a tax deduction anymore. You can't write off entertainment. But regardless, so tax deduction, which means my business is paying for the trip, the hotel stay, the airfare, In my case, I used points. I like Dave Ramsey in a lot of ways, but I know that he's anti-using credit cards. I just pay off my credit card every 2 weeks when I make my allocation day and pay off bills. And so guess what? I've racked up a crapload of points because I put business charges on my credit card. And when I take my family places and I go travel, I don't bring my wife. I don't pay any money. So I also don't carry any credit card debt. So despite what Dave Ramsey says, you can actually get the benefit of the credit card without having the downfall of consuming or having consumer debt. Anyways, lots of side tangents there. I'm just so excited to be back. I want to share everything with you. So anyways, tax deduction, business pays for it. What What do you do with that from a Profit First standpoint though? So theoretically, um, the payment for the resort and for the airfare, the cabs, that stuff, it comes out of my operating expense accounts. So what do you do? Because theoretically, that is not operating expense. If I were not the owner of the business, The business wouldn't have incurred those charges. That makes it an owner's pay category. Just same with like, like my cell phone, home internet, things like that. If I weren't the owner of the business, would the business actually cover this expense? Um, and so in this case, no, the business wouldn't have a Costa Rica travel expense. So it's owner's pay. So what do I do? Well, there's a couple of ways to do it, but for simplicity, what you're just going to do is have your owner's pay account reimburse your operating expense account for those charges. So, and that's what I would do in this case. I would look at the cost, say that the trip costs $6,000. I would take $6,000 from my owner's pay. bank account transferred into operating expenses, and now operating expenses have been made whole again, and the cash came out of owner's pay like it was supposed to in the first place. Now, as a side note to that, you should be having charges that come out of your operating expense account every month that for tax purposes is a tax deduction, but for Profit First purposes is really for your benefit as owner's pay. So you probably should know what that number is so that every month your owner's pay account is reimbursing your operating expense account for the owner's pay business expenses. That is the way we take advantage of the tax code while also still working within the Profit First system. Now, on the other— so the other token or the other angle I wanted to cover is, you know, in reality, The trip was $6,000 to $7,000. And it was our 15-year anniversary. So saving up for that and planning for it, we had planned it well in advance. But what do you do if you hear that number and you say to yourself, one, I would never take a trip that costs that much money, or two, I don't even know how I could afford to take a trip like that? One of the things I love about the Profit First system is if there is something that you really want to do, Create an extra account for it. And, and maybe that's not in owner's pay, maybe that's on your personal account side. It doesn't matter. The point is you're earmarking some funds so that as you do the transactions, you take money out of the bank account for owner's pay purposes or profit distributions. Because look, profit distributions is a great way— like spending that on personal travel. That's a great purpose for the profit distributions. Set aside the money so that if you wanted to take a big trip and you knew what the cost was, you would be able to save for it over time instead of like, oh, I actually really do want to go somewhere, but gosh, I just don't have the $6,000. So then you say to yourself, I'm never going to be able to do that. So we like the idea of setting aside and earmarking the money, whether that's a separate business account or a separate account on the personal side, it's a great strategy because then you don't feel the hit of it. And when the money's there, you're able to reward yourself. So human behavior, we like to work towards things. And so that is also, in my mind, gives you motivation to keep doing things because you are able to each allocation day, you're tranching money into it and you're working towards the goal. So it's kind of exciting and it pushes you throughout the rest of the time to say, you know what, I need to cut back on expenses. I really want that trip faster, um, maybe than what my initial plan is. So in order to do that, I need to, uh, I need to cut back on expenses so I have more percentage of my income that can go towards that. So that's what I wanted to share with you today. How do you write off a business trip? Make sure you have business purpose first before you start spending the money. If you're audited, you will need to be able to demonstrate to the IRS that you had purpose for the trip before you started spending money. And then second of all, owners pay. Sometimes those expenses come out of operating expense, the operating expense account. Just make sure you're reimbursing that account. Okay, remember, profit is a choice. Have the courage and wisdom to choose it.