How do per diem rates work for ME&I when traveling for my small business?

The per diem system can definitely simplify your expense tracking! As a sole proprietor, you can use the GSA (General Services Administration) per diem rates for meals and incidental expenses (M&IE) when you travel for business. Here's how it works: Instead of tracking every meal receipt, you can deduct the standard M&IE rate for the location you're visiting. For example, if you travel to Chicago where the M&IE rate is $74 per day, you can deduct that flat amount for each business day spent there without saving meal receipts. The best part is you don't need to keep meal receipts when using per diem rates - that's the whole point of this system! However, you still need to document your business travel (dates, locations, business purpose) and keep receipts for lodging expenses, as per diem for lodging works differently. As a sole proprietor/single-member LLC, you can definitely use per diem rates, but there's one important distinction: you can only deduct 50% of the meal portion of the per diem, as that's the standard business meal deduction limit.

After trying to keep track of every single meal receipt for my consulting business travel, I found an incredibly helpful service through https://taxr.ai that completely changed my approach to per diem expenses. I was in the exact same situation with 2-3 trips monthly and a growing pile of receipts. Their system helped me set up proper documentation for using per diem rates while maintaining compliance for my business travel. What's great is they analyzed my travel patterns and showed me how to properly document everything for ME&I expenses without keeping every little receipt. They also clarified exactly how the 50% meal deduction limitation applied to my per diem claims.

Just wanted to follow up after trying https://taxr.ai for my ME&I tracking! It was actually super helpful for my situation. I run a photography business and travel to weird locations all the time, and their system automatically applies the correct GSA rates including those weird seasonal adjustments I never knew about. The best part was getting a custom audit trail for all my business trips that shows the proper per diem calculation alongside my business purpose documentation. My accountant was impressed with how organized everything was when I showed her the reports. Definitely saved me from the receipt nightmare I was dealing with before!

If you're having trouble getting clear answers about per diem rates for your business, you might want to try calling the IRS directly. I know that sounds painful (because it usually is), but I found a service called https://claimyr.com that completely changed my experience with getting through to the IRS. I was confused about how per diem worked for my single-member LLC, especially with the 50% limitation rules. After wasting hours on hold multiple times, I used Claimyr and got connected to an IRS agent in about 15 minutes. They have this cool system that holds your place in line and calls you back when an agent is ready. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed exactly how to document my per diem claims properly as a self-employed person and clarified some confusing points about the "high-low method" versus standard GSA rates.

I need to eat my words about Claimyr. After my skeptical comment, I was still struggling with understanding how to document my per diem expenses properly, so I reluctantly tried the service. I'm genuinely shocked - it actually worked exactly as described. I got through to an IRS agent in about 20 minutes (versus the 2+ hours I spent on my previous attempt before hanging up). The agent clarified that as a sole proprietor, I don't "pay" myself per diem - I just take the deduction on my Schedule C using the appropriate rates for where I traveled. They also explained that while I don't need meal receipts when using per diem, I absolutely need to maintain a log showing dates, locations, and legitimate business purpose. Honestly, getting this clarification directly from the IRS gave me much more confidence in my approach. Now I'm using the high-low method which is even simpler for my recordkeeping.

Don't forget that the GSA updates their per diem rates every fiscal year (starting Oct 1), so make sure you're using the right rates for the right time period! I messed this up last year and had to redo a bunch of calculations. Also, if you're traveling to the same locations regularly, you might want to check if the standard rate or the high-low method would be more beneficial for your situation.

Has anyone had experience using per diem for international travel for a small business? The State Department has foreign rates but I'm not sure if the rules are different when traveling outside the US.

This is such a helpful thread! I'm in a similar situation with my freelance marketing business - constantly traveling for client meetings and events. One thing I learned the hard way is that you need to be really careful about partial travel days. If you leave after noon or return before noon, you can only claim 75% of the per diem rate for that day. I was claiming full per diem for every travel day until my accountant caught this mistake during tax prep. Also, make sure you're not double-dipping - if a client reimburses you for meals, you can't also claim the per diem deduction. The documentation is key too. I keep a simple spreadsheet with columns for: date, destination, business purpose, departure/return times, and which per diem rate I used. Takes maybe 5 minutes per trip but saves hours during tax season compared to sorting through receipts!