Are You Tracking Your Business Mileage?

If you use your personal vehicle for business, keeping track of your mileage is an important part of maintaining good business and tax records.

Business owners often remember the obvious trips, but those smaller trips throughout the year can add up quickly. A trip to the bank, supply store, post office, client meeting, or job site may not seem like much at the time, but over an entire year those miles can become significant.

The key is to track your business mileage as you go instead of trying to recreate it at tax time.

What Types of Trips Should You Track?

Depending on your circumstances, business-related driving may include trips to:

• Meet with clients or customers
• Pick up business supplies
• Make business bank deposits
• Travel between business locations
• Visit job sites
• Attend business meetings or training
• Meet with vendors
• Make business-related trips to the post office or bank

Not every trip automatically qualifies as business mileage, so documenting the business purpose of each trip is important.

What Mileage Is Considered Commuting?

One of the most common mileage questions is whether driving from home to work counts as business mileage.

In general, your normal drive between your home and your regular place of business is considered commuting. Commuting miles are personal miles and are generally not deductible business mileage.

This is generally true even if you conduct business calls during the drive, carry work supplies with you, or drive a vehicle that you also use for business.

When Can Driving From Home Be Business Mileage?

There are situations where mileage beginning at your home may qualify as business mileage. The answer can depend on where your regular place of business is located and the purpose of the trip.

Be Careful With the Home Office Rule

Simply working from home occasionally does not automatically make every trip from your home deductible business mileage.

Your home office must meet specific tax requirements to qualify as your principal place of business. If it does, trips from your qualifying home office to clients, job sites, vendors, meetings, or other business locations may be treated differently from a normal commute.

If you're unsure whether your home qualifies as your principal place of business, talk with your tax professional before treating your home-to-business travel as deductible mileage.

A Simple Way to Remember It

Why Is a Mileage Log Important?

Good mileage records help document when you drove, where you went, how many business miles you drove, and why the trip was business related.

Waiting until tax time to estimate your mileage can make it difficult to accurately remember an entire year's worth of business travel.

A simple mileage log or reimbursement form makes it much easier to keep consistent records throughout the year.

What Should You Record?

You don't need to make mileage tracking complicated. For each business trip, record the basic information about the trip.

Tip: When recording mileage, don't just write "business." Include a short description such as "Client meeting – ABC Company," "Job site inspection," "Bank deposit," or "Office supply pickup." This creates a much better record of the business purpose of the trip.

What About Employees Who Use Their Personal Vehicles?

If an employee uses their personal vehicle for business purposes and the business reimburses them for mileage, the business should maintain documentation supporting the reimbursement.

A simple Mileage Reimbursement Form allows the employee to document their business travel and provides the business with a record supporting the reimbursement.

The form can also document the mileage rate used, the reimbursement amount, employee certification, and approval by the business.

Do Mileage Reimbursement Rates Change?

Yes. Mileage rates can change from year to year, so businesses should verify the applicable mileage rate before calculating reimbursements or preparing tax records.

For this reason, a mileage reimbursement form should include a space to enter the applicable mileage rate rather than permanently printing a specific rate on the form.

Don't Wait Until Tax Time

Mileage is one of those business expenses that is much easier to track as you go.

Whether you use a mileage app, spreadsheet, written mileage log, or reimbursement form, the most important thing is to develop a system and use it consistently throughout the year.

Trying to reconstruct an entire year's worth of mileage when you're preparing your tax return can be frustrating and may result in missed business mileage or inadequate documentation.

Need a Simple Mileage Reimbursement Form?

We've created a simple Mileage Reimbursement Form that businesses can use to document business mileage and calculate employee mileage reimbursements.

The form includes spaces for the date, business purpose, starting location, destination, business miles, mileage rate, total reimbursement, employee certification, and approval.

If you're unsure how mileage should be handled for your business, Simple Accounting can help you determine the appropriate way to track and document your business vehicle expenses.