You are required to keep track of your mileage as a self-employed individual or business owner for tax for reimbursement purposes. Mileage logs are an important tool for accurately tracking business-related travel and can help you save money on taxes and expenses.
This article will discuss the significance of maintaining accurate mileage logs, as well as some tips for creating and maintaining them.
Why are Mileage Logs Important?
Mileage logs keep track of your personal and business-related travel and can be used to calculate tax deductions or request reimbursement from your employer. Without accurate mileage logs, you risk missing out on potential deductions or overestimating your mileage, which may result in IRS fines or penalties.
Furthermore, accurate mileage logs can assist you in monitoring your business expenses and making sound financial decisions. You can identify areas where you may be overspending on transportation costs by tracking your mileage and adjusting your budget accordingly.
Creating a Mileage Log
Creating a mileage log could perhaps appear to be a challenging task at first, but with the right tools and techniques, it can be a simple and straightforward process. The following are some steps to take when creating a mileage log:
Choose a mileage logging format
Mileage logs can be created in a paper logbook or digitally with spreadsheets or by using GPS mobile mileage tracking apps, like MileageWise. Choose a format that works best for you and that you can commit to maintaining consistently.
Record your starting mileage
At the beginning of each year or when you start using a new vehicle for business purposes, record the starting mileage in your mileage log.
Record all your personal & business trips
Although the IRS doesn’t mandate you to keep track of your personal mileage log, maintaining accurate personal & business mileage logs is important for tax purposes because it can help in case of an audit. Auditors often ask for documentation of all mileage claims to ensure that the claimed expenses are legitimate. With a detailed and accurate mileage log, you can easily provide the necessary documentation to support your claims.
Moreover, mileage logs can be helpful in case of personal trips that are also used for business purposes. If auditors find personal trips on your mileage log, they may question their business purpose. However, with proper documentation, you can prove that the trip was indeed for business purposes.
Track your mileage every day
At the end of each week or month, calculate the total mileage for all personal and business-related trips and enter it into your mileage log.
Maintaining a Mileage Log
Once you have created a mileage log, it’s important to maintain it regularly to ensure its accuracy and usefulness. Here are some tips for maintaining a mileage log:
Update your mileage log regularly
Don’t wait too long to update your mileage log, as it can be easy to forget details about a trip if too much time has passed.
Keep track of receipts
If you incur expenses related to your business-related travel, such as tolls or parking fees, keep track of the receipts and record them in your mileage log.
Review your log periodically
Review your mileage log periodically to ensure its accuracy and to identify areas where you may be overspending on transportation costs.
MileageWise: The Ultimate Mileage Log Solution
While creating and maintaining a mileage log can be a tedious task, there are tools available to make the process easier and more accurate. MileageWise is a GPS mileage log app with a multitude of features to assist you in automatically tracking your personal and business-related travel as well as expenses.
MileageWise uses GPS technology to automatically track your mileage, making it simple to record and categorize your trips. It is the only application that has the capability to import your Google Timeline history to create a mileage log, use of AdWise, an AI-powered tool that can automatically fill in missing details about your trips, and retrospective mileage log creation, which allows you to create accurate mileage logs even if you’ve missed recording some trips.
MileageWise also integrates with popular business tools like Freshbooks, making it simple to import your mileage logs into your accounting software.
Conclusion
In conclusion, keeping an accurate and detailed mileage log is essential for any business owner or self-employed individual who wants to accurately track their business mileage for tax and reimbursement purposes. With the advancements in technology, there are now several mileage tracking apps available to help simplify the process, including the most popular being MileageWise.
Not only does it offer automatic tracking and IRS-proof mileage reports, but it also has the added benefit of being the only application that allows users to import their Google Timeline history and use AdWise to fill in any missing gaps as well as create a retrospective log.
With MileageWise, you can rest assured that you’re keeping a precise and thorough mileage log that can help you save time and money during tax season and provide important IRS-proof documentation in case of an audit. Don’t let a lack of mileage tracking hold you back from reaching your full potential as a business owner. Try out MileageWise today and experience the benefits for yourself.
Also read: The Entrepreneur’s Guide to Improve Financial Literacy
