Important Details of Mileage Reimbursement You Should Know By Now
Carrying through with the daily errands that come with having a business is unavoidable. As an entrepreneur, you may not have the capacity to do them yourself but that does not imply you can’t entrust them to your employees or partners. Pickups and deliveries specifically require cars to deliver and your business may not have company’s automobiles to use in these cases. That should however not curtail you from doing what you got to do. Your employees can use their own personal vehicles to help you run your business errands but ultimately provide you with their milage sheet for you to offer mileage reimbursement.
Defining Mileage Reimbursement
Mileage reimbursement is the compensation you give to your employees or partners for using their personal vehicles or automobile to run your business activities. When they come to you for the compensation you can consider using IRS standard mileage charges to know how much they should get. These charges change yearly which calls for keeping up to date with the changes. 54.5 cents per mile driven is the standard mileage compensation charge for the year 2018. Sending your employee to pick up products 20 miles away and returning them to the business location would translate to 40 driven miles which equals $21.8 worth of compensation.
What Mileage Reimbursement Entails?
Supposing you are new to this mileage reimbursement thing, you must be wondering how these figures are put together to satisfy both the employee and the employer. Well, while computing mileage reimbursement a number of things have to be considered:
- Registration Fees
- Gas charges
- Maintenance charges
If the business errands were run using the company automobiles then you should not use the federal mileage reimbursement to compensate them.
How Does It Work?
It is important that while on a business trip, your employees keep track of the distance they cover. This might even call for them to have a pen and paper with them just for better record keeping. Multiple enterprises prefer to give their employees mileage sheets or forms which has the following details
- Total miles
- Miles traveled
- Purpose of business
These forms are made with many lines which mean that the employee can fill in as many trips as possible. Employees can then submit the forms every once or twice a year to receive lump sum amounts rather than small compensations.
As a business, you can, however, create some policies, rules, and exemptions regarding the milage sheet and include them in the employee guidebook to mitigate any form of confusion in the future. How you compensate them is your choice, while some choose to pay them with regular wages others prefer direct deposit or cutting them a check. This payment should be processed not more than two weeks after the mileage reports have been submitted.
Advantages of Reimbursing Your Workers:
- When you are regularly reimbursing your employees for running business errands you get a tax break
- It offers a great perk for your workers which generally boost their willingness to run business errands knowing they will be compensated. Failing to reimburse them can create a poor employer-employee relationship which ultimately slows down progress in the business.
- It is the best way of amplifying employee satisfaction and benefiting from tax deductions