The ultimate list of tax write-offs for tour and activity operators

Running a tour or activity business involves expenses, but the good news is that many of them can be deducted at tax time. Knowing what qualifies as a tax write-off can help you lower your taxable income and keep more of your hard-earned revenue.

FareHarbor B.V. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before submitting your taxes.

In general, the IRS allows businesses to deduct ordinary and necessary expenses. That means the cost must be both:

• Ordinary: Common and accepted in your industry (e.g., marketing, equipment, insurance)
• Necessary: Helpful and appropriate for running your business (e.g., training costs, transportation, wages)

While some deductions are straightforward — like paying your guides or covering fuel costs — others are easy to overlook, such as branded uniforms or industry certifications. However, not every business expense qualifies, and claiming the wrong deductions could raise red flags with the IRS.

In this guide, we’ll break down the most common tax write-offs for tour and activity operators, highlight lesser-known deductions, and outline best practices to ensure you stay compliant while maximizing savings.

Common tax deductions for tour and activity businesses

Tour and activity operators incur a wide range of expenses to keep their businesses running smoothly. Fortunately, many of these costs are tax-deductible, helping to reduce taxable income and improve profitability. Below are some of the most common deductions you should track throughout the year.

Equipment & gear

Whether you run zipline tours, kayaking excursions, or walking tours, the equipment needed to operate your business is often deductible. This includes:

• Boats, kayaks, paddleboards, and rafts
• Climbing harnesses, helmets, and safety gear
• Cameras and drones for marketing or tour documentation
• Radios and communication devices

For larger purchases, depreciation rules may apply, allowing you to deduct the cost over multiple years rather than all at once.

Marketing & advertising

Spreading the word about your business is essential, and most marketing costs qualify as tax deductions. These can include:

• Website hosting and maintenance
• Paid digital advertising (Google Ads, Facebook Ads, etc.)
• Business cards, flyers, and printed brochures
• Branding and logo design services
• Social media management software

Staff wages & contractor fees

If you pay employees or independent contractors to help run your tours, these expenses are deductible. This includes:

• Salaries and wages for tour guides, drivers, and administrative staff
• Payments to freelance photographers or videographers
• Payroll taxes and benefits provided to employees

Insurance costs

Protecting your business with the right insurance is not just smart — it’s also deductible. Common policies that qualify include:

• General liability insurance
• Workers’ compensation insurance
• Vehicle and equipment insurance
• Business interruption insurance

Transportation & fuel

If your business requires travel, you can deduct expenses related to vehicles and transportation. These may include:

• Gas and maintenance for company-owned vehicles
• Mileage for personal vehicles used for business purposes (must be documented)
• Rideshare or taxi fares related to business activities
• Parking fees and tolls

Office & administrative costs

Even if you don’t operate out of a traditional office, certain administrative expenses still qualify as deductions. These include:

• Rent and utilities for office or storage space
• Booking and scheduling software
• Business licenses and registration fees
• Office supplies like computers, printers, and phones

Tracking these expenses year-round ensures you’re maximizing deductions while staying compliant with tax regulations.

Unexpected write-offs many operators overlook

While most tour and activity businesses know to deduct common expenses like equipment and wages, some industry-specific costs often go unnoticed. These overlooked deductions can add up to significant savings if properly tracked and claimed. Here are some tax write-offs many operators miss.

Uniforms & branded apparel

If your business requires staff to wear uniforms, the cost of purchasing and maintaining them is deductible. This includes:

• Shirts, jackets, or hats with your company logo
• Specialized clothing like wetsuits, hiking boots, or waterproof gear
• Laundry or dry cleaning costs for required uniforms

Pro tip: Branded merchandise for resale isn’t deductible as a business expense but may qualify under cost of goods sold (COGS).

Permits & licenses

Many tour operators need specific permits or licenses to legally operate. These costs can be deducted, including:

• National park permits or access fees
• Local business licenses
• Certifications required for legal compliance (e.g., boating licenses)

Training & certifications

Investing in professional development for yourself or your team can be a valuable tax deduction. Consider expenses related to:

• First aid and CPR certifications for tour guides
• Specialty training (e.g., scuba diving instructor courses)
• Safety workshops and risk management training

Customer experience enhancements

Providing a great customer experience often involves small, recurring costs that can be deducted. Examples include:

• Complimentary snacks, bottled water, or sunscreen for guests
• Branded giveaway items like stickers or tote bags
• Professional photography or video footage for marketing and guest souvenirs

Conferences & industry events

Attending trade shows, networking events, or educational conferences to grow your business? These expenses are deductible, including:

• Event registration fees
• Travel and lodging costs
• Meals and entertainment related to business networking

Bank & payment processing fees

Transaction fees might seem small individually, but they add up over time. Many operators forget to deduct:

• Credit card processing fees from online bookings
• Merchant account fees for payment platforms
• Bank fees for business accounts

Tracking these overlooked expenses can help reduce your tax bill and increase savings.

Red flags: What might trigger an audit?

Maximizing tax deductions is essential, but taking the wrong approach can lead to unwanted attention from the IRS. While audits are rare, certain red flags can increase the likelihood of an audit. Here’s what tour and activity operators should be mindful of when filing taxes.

Overestimating deductions

While deductions help reduce taxable income, claiming excessive or unrealistic expenses can raise suspicion. Be cautious of:

• Writing off 100% of your income in expenses — this signals to the IRS that your business may not be profitable or could be a hobby rather than a legitimate company
• Claiming deductions that seem too high for your industry — for example, writing off an unusually large amount for office expenses when most of your work is done outdoors

Pro tip: Keep clear records and ensure deductions align with the scale of your business operations.

Mixing personal and business expenses

Blurring the lines between personal and business expenses is a common mistake that can lead to IRS scrutiny. Be mindful of:

• Using a personal vehicle for business and claiming too many miles without proper documentation
• Writing off meals, travel, or entertainment that don’t have a clear business purpose
• Claiming home office deductions without a dedicated space used exclusively for business

Pro tip: Maintain separate business and personal accounts to track expenses accurately.

Large one-time deductions

Big-ticket purchases can be deducted, but they often need to be depreciated over time rather than written off in a single year. Examples include:

• Boats, ATVs, or high-value equipment
• Office renovations or leasehold improvements
• Expensive marketing campaigns or branding overhauls

Pro tip: Work with an accountant to determine whether large expenses should be deducted upfront or depreciated over multiple years.

Inconsistent record-keeping

The IRS may request proof of deductions, so keeping organized and detailed records is essential. Issues that can trigger an audit include:

• Missing receipts for significant expenses
• Unclear documentation for cash payments to contractors or suppliers
• Round-number estimates instead of precise amounts

Pro tip: Use bookkeeping software or apps to track and categorize expenses throughout the year.

Excessive meal & entertainment deductions

While some meals and entertainment expenses are deductible, they must be directly related to business. Red flags include:

• Claiming too many meals relative to business size and revenue
• Writing off lavish entertainment expenses that don’t align with typical business operations
• Deducting meals without proper documentation of who attended and the business purpose

Pro tip: Keep detailed records, including receipts and notes on the purpose of each expense.

Stay compliant while maximizing your deductions

Understanding tax regulations and avoiding these red flags ensures your deductions are legitimate while keeping your business safe from unnecessary IRS scrutiny.

Best practices for tracking expenses throughout the year

Staying on top of your expenses throughout the year not only helps maximize deductions but also ensures compliance with tax regulations. Proper record-keeping can save time, reduce stress during tax season, and protect your business in the event of an audit. Here are the best practices tour and activity operators should follow.

Use accounting software

Manual record-keeping can lead to errors and missed deductions. Investing in accounting software makes it easier to track expenses, categorize spending, and generate reports. Popular options include:

• QuickBooks: A comprehensive tool for tracking income and expenses (now available to be fully integrated with FareHarbor!)
• Wave:  A free accounting solution for small businesses
• Expensify:  Ideal for managing receipts and business expenses on the go

Pro tip: Automate expense tracking by linking your business bank account and credit card to your accounting software.

Separate business & personal finances

Keeping business and personal expenses separate is critical for accurate financial reporting. To do this:

• Open a dedicated business bank account and credit card
• Pay for all business-related expenses from these accounts
• Avoid using personal funds for business purchases unless absolutely necessary

Pro tip: If you do use personal funds for business, reimburse yourself properly and document the transaction.

Keep digital copies of receipts

Paper receipts can be lost or damaged over time. Instead, store them digitally using:

• Expense-tracking apps (e.g., Expensify, Shoeboxed, or Evernote)
• Cloud storage solutions (Google Drive, Dropbox)
• Your accounting software’s receipt upload feature

Pro tip: When scanning receipts, include a note on the business purpose for easy reference later.

Categorize expenses as they occur

Waiting until tax season to sort through expenses can be overwhelming. Instead:

• Review transactions weekly or monthly
• Assign the correct tax categories for each expense (e.g., equipment, marketing, wages)
• Flag any expenses that may require additional documentation

Track mileage for business travel

If you use your personal vehicle for business purposes, you may be eligible for mileage deductions. The IRS requires detailed logs, so use:

• MileIQ: A GPS-based mileage tracker.
• QuickBooks Self-Employed: Tracks mileage automatically.
• A written log with date, distance, and purpose of each trip.

Pro tip: Commuting from home to work isn’t deductible, but travel between business locations or to client meetings may qualify.

Schedule regular financial check-ins

Set aside time each month to review your finances and make sure everything is in order. This can help:

• Identify unnecessary expenses and cost-saving opportunities
• Catch potential errors before tax season
• Ensure you’re on track with your deductions

Pro tip: If you’re unsure about any expenses, consult with an accountant early rather than waiting until tax time.

Work with a tax professional

A certified tax professional can:

• Ensure you’re taking full advantage of eligible deductions
• Help structure large purchases for optimal tax benefits
• Provide guidance on IRS compliance and tax-saving strategies

Pro tip: Meet with your accountant before the end of the year to plan deductions strategically rather than scrambling at tax time.

Final thoughts: Keep more of your hard-earned revenue

Understanding tax write-offs is one of the most effective ways to reduce your taxable income and reinvest in your tour or activity business. 

By identifying common deductions, taking advantage of industry-specific write-offs, and avoiding red flags that could trigger an audit, you can ensure you’re maximizing your savings while staying compliant with tax regulations.

The key to stress-free tax filing is staying organized year-round. Using accounting software, tracking expenses as they occur, and consulting a tax professional can help you make the most of every deduction without the last-minute scramble.

Want to streamline your operations even further? Discover how FareHarbor’s booking and management tools can help you save time and grow your business. Book a demo today!