Relatively few would deny the appeal of vacationing in Hawaii. From lush rainforests ripe for hiking to pristine beaches (as in 400-plus) perfect for exploring, the Aloha State has long served as one of the most lusted-after destinations for a reason.
But if you’re a Small Business Owner—either green, veteran, or somewhere right in the middle—jetting off to one of the world’s most isolated archipelagos can seem more pipe dream than doable. Meetings, emails, daily to-dos, impending IRS payments—all might persuade many to take a trip to the local pool instead.
And yet, with the New York Enterprise Report finding that Small Business Owners (SBOs) work twice as much as regular employees and that just 57% of them take annual vacations, many are not only deserving of a little R&R but actually need it. (Burn Out is real.)
So what if you could have your pineapple-coconut cake, and, well, eat it too?
In other words, what if you could take that trip to Hawaii and write off some of it to help with your tax bill?
While we’re certainly not advocating for abusing the system—aka, writing off your whole posse’s Hanalei holiday—we are here to show you 9 savvy ways to leverage the system, so that you, too, can savor Hawaii’s awesomeness:
1 – Turn it Into a For Real Business Trip
As tempting as it may sound, you can’t just book a 7-day stay on Maui, use one of those afternoons to toss around business cards at the Grand Wailea and another to sit at a café checking work email, and write off the whole thing as “business.”
Rather, you need to determine how—and, importantly, why—a trip to Hawaii would be advantageous and/or necessary to building your asset, enhancing your client list, or honing your skillset (among other reasons).
Then, operate accordingly, balancing your days between beaching it and getting down to business.
“As a general rule of thumb,” Forbes reports, “you should count up the number of business and personal days in your planned trip; the majority of days must be for business activities.” That said, travel days “can count as business activities.” Bonus points: So does a weekend that falls between “workdays on Friday and Monday.”
2 – Plan in Advance
True, true: Some of the most enjoyable vacations are those taken with only a loose itinerary in mind, if one at all. But the IRS requires that business meetings be set up prior to your trip. Which brings us to our next point:
3 – Do Your Homework
Back to #1 and the very clear question—which the IRS might ask—of why Hawaii (besides the obvious). Need content creation, web design, social media help, and web marketing aimed at those interested in Hawaii? Book a consultation with Hawaii Web Group. Outsourcing some of your work to a freelancer on Oahu? Well, perfect—and surely you see what we’re getting at.
4 – Score an Interview
By no means are we in favor of setting up an interview for a potential job that you have no intention of taking. But if you’re serious about moving to Hawaii—and not just vacationing on the islands—chances are you may need a job, or at least clients, upon your arrival. The IRS allows for travel expense-deductions that are directly related to interviewing for a new gig, one caveat being that it can’t be your first job ever. (Sorry not sorry, high school seniors.)
5 -Eat Wisely
It’s enticing to dream about writing off an extravagant, four-course meal at Mama’s Fish House, or a brunch buffet at one of the Big Island’s most opulent resorts. But, for every day that’s considered business, you can write off only 50% of your food costs—and those ought to be judicious, and real business actually needs to be conducted.
6 – Tone Down the Flash
Generally, the IRS allows for “ordinary and necessary expenses” that arrive with business trips. Think: baggage fees and transportation to the airport. Don’t think that this gives you carte blanche to get Kim Kardashian flashy. A brow will likely be raised if you, needing wheels to get around, rent a Benz when a Ford Focus would more than suffice, stay at the Four Seasons when there’s a nearby Holiday Inn, or that a new Acacia suit is required for that convention. Speaking of:
7 – Look into Conferences and Conventions
Traveling to a conference or convention may be expensed (or a portion thereof) but only if it’s directly associated with your profession or trade. Meaning, if you own a literary agency or writing business, you may be able to write off attending, say, the Kauai Writers’ Conference on Kalapaki Beach on Hawaii’s oldest island. Likewise, if you want to attend a tech event at the Hawaii Convention Center, your job needs to be in tech in order for you to expense it. Keep in mind, however, that the IRS will give consideration to its necessity. If a similar writers’ conference or tech convention is held in your “tax home” (where your business is based), you’ll have some trouble writing off that roundtrip ticket on Hawaiian Air.
8 – Document Document Document
And we don’t mean for your Instagram: While the IRS doesn’t require you to save receipts for expenses under $75, you will need to document all of the expenses associated with your trip. Meaning, that breakfast with a potential client in Paia may have only come to $60 but the price of the meal, as well as who you met with, when, why, and what was discussed, needs to be recorded. Numerous apps can help you with this; Expensify is just one of many.
9 – Don’t Be Careless or Devious
If the IRS deems your travel expenses illegitimate—such as flying your family of four to Lanai when only you are required for that pre-arranged meeting—you will face serious penalties. As Nellie Akalp advises, “the best way to avoid trouble is to be honest about your intentions, deduct only the expenses you’re entitled to, and then keep all supporting documentation to back up those deductions.” In Hawaii, that’s known as being pono (or doing the right thing)—and when in Rome, right? Now go enjoy that glorious Hawaiian sunset—you more than deserve it.
We are not tax professionals, but we do encourage people to explore the tax breaks they’re entitled to. Besides consulting with a tax pro, you may want to check out the IRS’s Pub 463, which covers Travel, Entertainment, Gift, and Car Expenses.