Being among the best salespeople in the game can have a ton of benefits. While that may be true, those benefits recently dropped by a whole lot. Starting at the beginning of 2018, the tax plan all but removed any deductibles that employees can take related to incurred business expenses. Let’s take a deeper look at what that means, how it affects you as a salesperson, and what you should do about it. Plus, we’ll take a look at how taxes have changed for the 2019 year.
What to Know About the Tax Cuts and Jobs Act
Here is the exact language pulled directly from The “TAX CUTS AND JOBS ACT” which is the official title of the Trump Tax Bill. Listed below are all the expenses that are no longer deductible that could potentially affect you as a salesperson.
Under the provision, business expenses incurred by an employee are not deductible, other than expenses that are deductible in determining adjusted gross income
- Purchase of travel, transportation, meals, entertainment, gifts, and local lodging related to the taxpayer’s work;
- Business bad debt of an employee;
- Business liability insurance premiums;
- Passport fees for a business trip;
- Tools and supplies used in the taxpayer’s work;
- Work-related education.
How Does This Affect Salespeople?
So what exactly does this mean? Well here’s the reality. From now on, until the provision expires in 2025, salespeople will no longer be able to deduct any of the following expenses from their taxes:
- Plane Tickets
- Taking Clients Out
- Passport fees
Obviously, these provisions are going to have a pretty substantial impact on salespeople in the field. The average salesperson drives upwards of 500 miles per week and with gas costing an average of $3 per gallon, salespeople are shelling out an average of $60 per week. That may not seem like a lot but it adds up over a year to $3000 dollars just in gas costs. That’s not including the wear and tear on the vehicle that comes from the 25,000 miles they drive annually on average for work.
You can see how driving miles add up pretty quickly for an outside salesperson. All of the expenses with the job always seem to stack up at a staggering rate and for those who don’t work at companies who cover everything, which is often the case, salespeople used to lean on tax deductions. That is no longer an option. Outside salespeople will be left to shoulder these costs themselves and have to take all of these calculations into account.
Tax Changes for 2019
It’s a new tax year! So, what has changed for outside sales in 2019 tax deductions
The short answer is, not much.
Sales reps are still not allowed business expenses incurred out on the road. The only major change is in the standard deduction. What that means is it will be even harder for sales reps to claim any itemized deduction that could somehow qualify:
It’s estimated that roughly 95% of households will use the standard deduction this year. Unless your itemizable deductions exceed the standard deduction, then it will be in your best interest to use the standard deduction.
The current tax provisions will last until 2025, so it is still a wise move to lower your sales expenses to a minimum. It will be a while before there might changes that will benefit outside sales reps.
What to Do About Changes to the Tax Bill
It’s clear that as a salesperson, the less money you have to spend on job-related activities, the more money you’ll have in your pocket. At the same time, you don't want to be doing less work, meeting with clients and prospects less, or cutting down on your work ethic. All of that will lead to significant declines in performance and that's obviously no good. So what’s the answer?
The key is one word, efficiency. That doesn't mean navigating between meetings to make sure you get there efficiently: it means optimizing your entire route, your entire day, and your entire approach. Efficiency means following up with prospects when you're supposed to rather than forgetting and having to add it to the end of the week. It means, knowing the area so you can check in on nearby clients while you’re there without having to make another trip out specifically for them.
It doesn’t mean sitting in your car after every single meeting to manually log check-ins, burning gas the entire time. You have to be much more conscious about your time, energy, and money while you're out in the field.
Thankfully, there are tools that can help you make the most of your time and money. Sales efficiency tools can help you spend as little as possible while still exceeding your sales goals. Not only will you save on expenses, but you can be faster and more effective than ever.
So it's clear now that, due to this tax bill, salespeople are going to suffer a bit when it comes to work-related deductions. We’ve shown that the only real workaround is to try your best to cut down on these work-related costs while not sacrificing you clients or which leads us back to one keyword: efficiency. Well here at Map My Customers, our goal throughout our company is to provide a suite of effective tools that will cut costs, save time, and boost face time with clients. If you’re looking for a way to boost sales, give Map My Customers a try.