What Should Your Business Mileage Sheet Contain?
Keeping a mileage sheet can be beneficial to you and your business. It can be a great way to incur reimbursements for work-related trips. The IRS has specified information that is required to be included in the mileage log. Forgetting to record them can result in a nightmare. You should also know that there are certain limitations in the tax code in claiming deductions.
What Qualifies as Mileage for My Business?
Basically, anything that involves trips related to work will count as business mileage. It can be even as simple as driving to deposit at the bank, fetching office supplies, or going to a business meeting with clients outside your office.
How Much Can I Get as Deduction for My business Mileage?
Figuring out how much you can deduct for business mileage can be done in two ways. The first method is a set IRS standard rate. In 2018, the standard is 54.5 cents per mile. The second method is getting a percentage of all the expenses from using the vehicle for business purposes. In simple math, you add up the expenses and multiply it by percent use for business.
Fuel, lease payments, vehicle insurance, and maintenance costs are some of the things that are typically included in the computation. If 75% of the total miles driven are for the business, you will multiply that by the total expense.
Why You Need to Keep Track of Mileage Log?
The mileage log will serve as evidence and basis if a business or an employee is looking into deducting the mileage from their taxes. Most businesses just do a rough estimate of mileage. But, this is one of the areas that the IRS are very particular about. You can be audited if they find any discrepancy.
Sole proprietors get audited more often as they most likely do not have the time or proper organization to keep the records up to date. If you are looking into doing it, you should comply with the IRS standards of updating it regularly.
Tips to Efficiently Track and Keep Record of Business Mileage
On the first day of January, make it a point to record the odometer reading. Even if it means that you will write it in a notebook, you should do it. It takes 21 days to form a habit, and if you practice it, you will get used to recording and taking notes of the required information in your mileage log.
Keep the receipts as they will serve as supporting documents in case the IRS asks you for verification. Also, you should note if there are times when you cannot attain a receipt. Do everything in your power to defend the mileage log you keep.
It is non-arguable that having a mileage sheet will save you from all the headaches. It will even be easier if you download a pre-made template of a mileage sheet. Always remember that no matter how small the miles are on a daily basis, it can go a long way when added up.