Small business - reimbursed for flying?

[CJones]

Curious if any small-business owners/employees use their private planes for company business and how their reimbursements work out. With a small business, I assume you could write the 'company flight policy' however you wanted without having to worry about the corporate 'suits' trying to prevent excessive liability.

Just wondering what kind of travel policies people have seen in the small business world that address flying yourself to the destination.

 

[Lance F]

We use our Mooney for our small business frequently. For me it's one great reason to have your own business. And there is no doubt it helps our business.
The plane is held in a separate LLC. On company business, the company pays for the direct costs, like fuel. The company also reimburses the LLC for a portion of indirect costs. We keep this much less than actual indirect costs. If we were audited, it would come out that the IRS owes us money. I and my CPA see no problem with this arrangement.

 

[Morne]

I get reimbursed for flying to sales calls or the plant for the small manufacturing business I am a partner in. To cover myself, I got it in writing from the majority shareholder/president that flying my private plane for company business was acceptable and reimbursable per the IRS guidelines.

Do it just like driving your private car for business. There is a diferent rate for planes at $1.29 per mile. That is the maximum and if you were audited you'd need to be able to prove that the fuel/oil/maintenance costs that much or more. If you want to be very conservative, you could use the per mile rates from what2fly.com if they are under the $1.29/mile maximum.

My flight to California and back was for a sales call.

Odds are the boss won't let you do this unless you're an equity holder as well. Alternately, if he's a pilot he might be sympathetic enough to approve it. In my case, I have both of those things going for me. Regardless, get very detailed approval in writing before undertaking busines flights and expecting reimbursement.

Still, I fly about as often for my own recreation as for business.

Obviously, don't fly any passengers for pay unless you have a commercial license (I don't and am not going to get one). Things get more complicated if you fly other employees or shareholders in your plane on the business trip. Keep it simple and cover your rear.

 

[poadeleted20]

I use my plane on my "company" business all the time. Since I am the "company," the policy is whatever I say it is, provided the accountant is happy, and so far, he is happy with my annual review of total cost divided by total flight hours to set an hourly rate for billing.

 

[JeffDG]

Obviously, don't fly any passengers for pay unless you have a commercial license (I don't and am not going to get one). Things get more complicated if you fly other employees or shareholders in your plane on the business trip. Keep it simple and cover your rear.

Umm...if you have a private license, it's no more complicated at all...you cannot accept reimbursement if you carry any passengers or property with a private certificate.

 

[CJones]

We use our Mooney for our small business frequently. For me it's one great reason to have your own business. And there is no doubt it helps our business.
The plane is held in a separate LLC. On company business, the company pays for the direct costs, like fuel. The company also reimburses the LLC for a portion of indirect costs. We keep this much less than actual indirect costs. If we were audited, it would come out that the IRS owes us money. I and my CPA see no problem with this arrangement.

Does the LLC fall into the realm of 135 at all or is it simply providing a 'vehicle' much like a car rental company?

With your setup, it sounds like all of the flight costs are eventually paid by the company - either directly or via reimbursement to the LLC that 'owns' the plane - minus pilot reimbursement. Correct?

 

[Lance F]

Does the LLC fall into the realm of 135 at all or is it simply providing a 'vehicle' much like a car rental company?

With your setup, it sounds like all of the flight costs are eventually paid by the company - either directly or via reimbursement to the LLC that 'owns' the plane - minus pilot reimbursement. Correct?

No 135 at all. We do not "hold out" to the public that we transport anything. There is no pilot reimbursement. If we fly customers, they don't pay anything.
We use company credit cards to buy the gas we use on business trips. The indirect costs are covered by an invoice from the LLC to the company.
If charges come in later, like the BS landing fees from Port of NY and NJ or MASSPORT, the company sends a check.
To me it's no different than any other form of transportation, be it Delta Airlines or a taxi; if it's used legitimately for business, the company pays for it.

 

[CJones]

To me it's no different than any other form of transportation, be it Delta Airlines or a taxi; if it's used legitimately for business, the company pays for it.

That's how I viewed it as well, but it seemed way too logical to actually be able to work that way in the 'real world'. Glad to see someone is actually able to make it work. Thanks for the info!

 

[Everskyward]

We have had pilots fly their own airplane to recurrent. They were reimbursed the cost of a rental car for the week or an airline ticket, whichever they would have used instead.

 

[jesse]

I've done some travel with small airplane for my small business this year - said small business just paid the rental bill. I guess I need to talk to an accountant to figure out how to work all of this on my taxes.

 

[TMetzinger]

I've done some travel with small airplane for my small business this year - said small business just paid the rental bill. I guess I need to talk to an accountant to figure out how to work all of this on my taxes.

If you're renting, it's like any other expense, just treat it like a business expense, like a taxi, or a book, or a server.

It's only when you own the airplane that it get's tricky as far as direct and indirect costs and such

 

[jesse]

If you're renting, it's like any other expense, just treat it like a business expense, like a taxi, or a book, or a server.

It's only when you own the airplane that it get's tricky as far as direct and indirect costs and such

Yeah. That's kind of what I figured. I don't fully understand the implications of some other things though:

-I have an LLC that has a few sources of income (flight instruction, some commercial pilot stuff, and software development)
-I put a lot of money into my commerical, cfi, and cfii this year. Could that stuff be considered an expense of the business?
-How about expenses relating to maintaining currency/recurrent training?
-I have a lot of pilot supplies. They were just all paid for with the LLC's checking account. They're all used strictly for the work that generates the income of the LLC. Seems legit to me.

My taxes just keep getting more complicated with each year - it's probably time I find someone that I can trust to figure it out for me.

 

[JeffDG]

If you're renting, it's like any other expense, just treat it like a business expense, like a taxi, or a book, or a server.

It's only when you own the airplane that it get's tricky as far as direct and indirect costs and such

If the plane is owned by an LLC, then you're not the owner, the LLC is. You can rent the plane from the LLC, just like you would from an FBO. The LLC is a separate "legal person", regardless of whether you control the LLC or not.

 

[JoeSelch]

Yeah. That's kind of what I figured. I don't fully understand the implications of some other things though:

-I have an LLC that has a few sources of income (flight instruction, some commercial pilot stuff, and software development)
-I put a lot of money into my commerical, cfi, and cfii this year. Could that stuff be considered an expense of the business?
-How about expenses relating to maintaining currency/recurrent training?
-I have a lot of pilot supplies. They were just all paid for with the LLC's checking account. They're all used strictly for the work that generates the income of the LLC. Seems legit to me.

My taxes just keep getting more complicated with each year - it's probably time I find someone that I can trust to figure it out for me.

Not an accountant. And no first-hand experience, yet. But, my accountant has told me (in a nutshell):

• Expenses related to becoming a professional pilot or flight instructor would not be deductible/business expenses
• However, once becoming a professional pilot or flight instructor, expenses relating to maintaining currency or expanding capabilities or furthering the business would be

IOW - no real benefit for/while taking up a new occupation; but, OK once you're in the biz

 

[TMetzinger]

Not an accountant. And no first-hand experience, yet. But, my accountant has told me (in a nutshell):

• Expenses related to becoming a professional pilot or flight instructor would not be deductible/business expenses
• However, once becoming a professional pilot or flight instructor, expenses relating to maintaining currency or expanding capabilities or furthering the business would be

IOW - no real benefit for/while taking up a new occupation; but, OK once you're in the biz

That's how I see it too. My employer paid for my CFI, so it was off my books altogether.

I put all my charts, insurance, proficiency flying (and it gets logged in my logbook as a proficiency flight), and other stuff purchased for flying or teaching as expenses.

When I do my CFII, I see that as expanding my business, not a new one, and I believe I can treat that as a normal expense. But I'll check that with an accountant.

 

[poadeleted20]

I don't fully understand the implications of some other things though:

-I have an LLC that has a few sources of income (flight instruction, some commercial pilot stuff, and software development)
-I put a lot of money into my commerical, cfi, and cfii this year. Could that stuff be considered an expense of the business?
-How about expenses relating to maintaining currency/recurrent training?
-I have a lot of pilot supplies. They were just all paid for with the LLC's checking account. They're all used strictly for the work that generates the income of the LLC. Seems legit to me.

My taxes just keep getting more complicated with each year - it's probably time I find someone that I can trust to figure it out for me.

AOPA has an excellent guide to flying expenses and taxes, and I believe it addresses your questions.
http://www.aopa.org/members/files/guides/tax_guide.html