How to Track Small Business Vehicle Miles
If you’re not tracking your company’s vehicle usage, you’re all but guaranteeing your future self a major administrative and accounting headache! Thankfully, we know a thing or two about tracking business vehicle miles, and we’re taking it upon ourselves to teach you how to do it efficiently, accurately, and with ease.
Because tracking mileage can be tedious and time consuming, you might find yourself wanting to cut corners, put it off, or guesstimate. But even though these approaches save you time and energy in the moment, we can guarantee they’ll come back to bite later!
Inaccurate data muddies your accounting and makes tax season a nightmare. Eventually, it costs you time and money by demanding more staff time and by negatively impacting your annual tax
How to track your business vehicle’s miles as accurately as possible:
- Make sure you’re tracking key trip data for each vehicle
- Record business miles with your taxes in mind
- Document each business vehicle’s miles in real-time
- Determine the best way to track mileage for your business
- Consider using an automatic mileage tracking app
5 benefits to tracking small business vehicle miles
When you start accurately tracking your fleet’s mileage, you can expect to see improvements in:
- Tax savings. Count on accurate records so that when tax season arrives, you can easily claim mileage as a business expense and get the return you deserve.
- Administrative efficiency. Reduce (or eliminate) extra and unnecessary accounting paperwork by ensuring that each driver’s mileage is tracked properly.
- Invoicing and accounting accuracy. Accurate mileage logs make invoicing and accounting simpler and more accurate.
- Customer transparency. A precise and detailed mileage log makes it easier to explain the miles or time you’re charging clients for.
- Employee performance. Having a record of all trip details — including any unauthorized offsite jobs or personal errands — will give you invaluable insights into employee productivity.
What mileage information do small business owners need to track?
Each mileage log should include:
- The trip date
- The total mileage
- The purpose of the business
- The destination
Should I track business miles for tax purposes?
Yes! All business miles can be claimed as business expenses. Dutifully tracking your mileage will help you maximize your return, putting extra money into your pocket.
Note that the requirements for claiming mileage as an expense can vary depending on your business type. Rules for claiming as a sole proprietor may differ from the rules for claiming as an LLC. It’s worth taking the time to make sure your tracking aligns with your business category’s requirements!
How to deduct business miles on your taxes
Use the standard mileage allowance
The IRS standard mileage allowance gives you a standard rate for each tax year, which you can use to calculate your deduction. Your deduction is calculated by multiplying your miles driven by the standard mileage rate.
Track your actual expenses
If you decide not to use the standard rate, you’ll have to record and include all business vehicle expenses (like gas, insurance, lease payments, tires, and maintenance) when you submit your taxes. The total of all these costs will then be multiplied by the percentage of total miles that the vehicle is driven for business, in order to produce your total, claimable expense amount. If the vehicle in question is used strictly for business, the percentage of total miles is 100 percent.
Note: The IRS only accepts timely and accurate logs as a way to backup a business expense claim. Know that they won’t accept estimates, and that you may be subject to fines and penalties if you claim a deduction that you can’t prove.
Tracking business vehicle miles
You accumulate business miles every time one of your vehicles is used for business purposes. You can track these miles manually, using your odometer and either a spreadsheet, an expense system, or a paper logbook. Or, you can track them automatically using a mileage tracking app. But no matter how you track your mileage, be sure to do it in a timely manner. Delaying your tracking can create unnecessary errors and discrepancies.
What keeps track of miles in a car?
If you’re tracking manually, you’ll need to reference your vehicle’s odometer and track both the starting and finishing addresses of your trip. You’ll do a quick calculation and then enter your mileage into your logbook.
If you’re using a mileage tracking app, a Global Positioning System (GPS) tracks your mileage automatically and accurately. The GPS communicates with a satellite network to pinpoint the tracking device’s location and track each vehicle’s exact mileage. Your tracking app then uses this information to calculate the value of each business trip, which it puts into a report you can submit for tax purposes.
TIP: Look for an app that integrates with your existing Customer Relationship Management (CRM) software. This way, you can add trips and create records that transfer directly to your database.
What’s the best way to track mileage?
There are three main ways to track your business miles that range in price, accuracy, and in the amount of administrative time that they require:
1. Paper logbooks and Excel spreadsheets
Paper logbooks and Excel spreadsheets are low-cost mileage tracking options, but they’re time consuming and often inaccurate. With them, your drivers will have to manually record each business trip, which is tedious and leaves room for error. To save time, many employees will use trip estimates rather than specifics.
2. Expense management systems
Expense management systems (used to track employee expenses and reimburse them) are one step up from paper logbooks and spreadsheets. They’re a low to medium-cost option that still relies on drivers to manually enter some trip data. But, once baseline details have been entered, they’ll either use odometer readings or integrate with Google maps to pull more data and make basic calculations, lightening your administrative load.
3. Mileage tracking apps
Mileage tracking apps are the most accurate and efficient way to track and report on trip data. They use GPS and smartphone technology to track location and mileage automatically for every trip, without requiring any manual data entry. Apps have an up-front cost, but they save you money by streamlining data entry, invoicing, reporting and accounting, and by ensuring the validity of your tax deductions.
TIP: If you’re looking to reduce the number of miles your business vehicles are clocking, a delivery route planner can automatically help your drivers stick to the quickest paths throughout their day, which can add up to serious savings over the year.
What’s the best app for tracking business mileage?
Mileage tracking apps aren’t necessarily one-size-fits-all. Different businesses have different needs, and may require different features. Here are some of the best mileage tracking apps currently available, broken down by the types of businesses they best serve:
Force by Mojio
Perfect for: Small business fleets.
Key benefits: Force uses live-map and GPS tracking to record every trip accurately and in real time. While it’s much more than just a mileage tracking app, Force can read the vehicle’s odometer for automated tracking across a fleet of vehicles. And, because it’s linked with each vehicle directly, there’s no need to turn it on or off!
- Uses a plug-and-play GPS tracking device
- Records a history of every trip
- Tracks vehicle health and warns you about issues before they become major problems
- Reports on how your vehicles are being driven
- Sends alerts if your vehicles are tampered with
- Offers customizable location alerts
- Provides easy-to-understand reports for tax and accounting purposes
- Uses super-accurate GPS to pinpoint vehicle locations within 10 feet
Perfect for: Business owners who use their vehicles for both personal and business purposes.
Key benefits: Separates business miles from personal miles for clean bookkeeping.
- Lets users set specific working hours when tracking is active
- Integrates with FreshBooks and Excel
- Tracks mileage and classifies the purpose of each trip
- Supplies reports needed to maximize tax deductions and reimbursements
- Adds vehicles via Bluetooth
Perfect for: Small business with up to five vehicles.
Key benefits: Uses photo capture for expense receipts which it uploads using the cloud for bookkeeping purposes.
- Offers manual and automatic tracking
- Connects with your vehicles via Bluetooth
- Includes personal and business expense reporting
- Automatically tracks deductible mileage
- Issues IRS-compliant reports
- Is fully customizable for each user
- Includes driver safety tracking
Perfect for: Freelancers, ride-share drivers, and other small business owners.
Key benefits: Connects to apps like Uber to track income and calculate taxes.
- Includes mileage and expense tracking
- Integrates with your business checking account
- Has a business tax tracker
- Exports detailed reports with receipts for accounting purposes
- Provides real-time, year-end, and quarterly tax estimates
Perfect for: Solopreneurs, independent contractors, those who are self-employed, and those who don’t log a ton of mileage.
Key benefits: A simple and intuitive dashboard that’s easy to figure out.
- Generates IRS forms
- Provides itemized mileage deductions
- Uses photo capture for expense receipts
- Swipes left or right to classify trips as business or personal
- Calculates mileage, start and end times, and reimbursement values
- Saves a GPS mileage receipt for each trip
Save time and money with a mileage tracking app
If you manage a small business fleet, you need a mileage tracking app!
Force by Mojio will save your drivers from having to use tedious logbooks, reduce your administrative hours, and eliminate many of your team’s biggest accounting and invoicing headaches. It’s an easy-to-implement change that has a far-reaching impact — and it just might make you the office hero!