With 2021 coming to a close, now is the time to make sure you are maximizing every tax advantage available. One tax advantage many small business owners tend to overlook is the miles they put on their vehicles.
The IRS requires that you substantiate your mileage expenses with adequate records. While there is no specific way you must track your miles, your mileage log should include:
- Dates of your business trips
- Locations you drove for work
- Business purpose of your trips
- Trip Mileage
If you drive your vehicle for personal use, you will need to prove the portion of use that is for business compared to personal.
The IRS currently does not require you to record your odometer at the beginning and end of your trips. However, we recommend taking a quick picture of your odometer at year end to make sure total miles are tracked. With so many other things small business owners need to worry about, mileage tracking is probably at the bottom of the to-do list and is quickly forgotten. Lucky for us, there are various apps out there that make it easier to record your business mileage accurately. Here are a few apps worth looking into:
- Everlance (iOS and Android friendly)
- Intuitive, user-friendly app that allows quick and easy tracking of miles
- Frequent places & trips are detected and automatically classified
- Customize trips with notes, photos, and vehicles
- While there is a free version that allows 30 trips per month, most users benefit from the Premium version, which also includes automatic expense tracking with bank and credit card sync.
- MileQ (iOS and Android friendly)
- Automatic tracking: App runs in the background tracking your miles and creating a comprehensive record
- One-swipe classification: Swipe right for business drives; swipe left for personal drives
- Accurate and customizable reports generated
- As low as $59.99/year for personal mileage tracking or $50/driver/year for team mileage tracking
- Stride (iOS friendly)
- In-app guidance on what expenses you can deduct and how to best track
- Provides an IRS-ready tax summary to make filing a breeze
- Offers an automatic system that detects when you’re driving so you can be sure to log every mile.
- TripLog Mileage Tracker (iOS and Android friendly)
- Provides administrators with the ability to set custom policies, such as commute mileage exemptions, frequent trip rules, and shortest distance calculations.
- Streamlines reimbursement approval process
- Allows you to see routes and unsafe driving behaviors so you can review each trip to spot any potential issues.
- Choose from Lite, Premium, or Enterprise pricing
Good mileage tracking apps will ensure you keep accurate, detailed records for you to take advantage of the business mileage tax deduction. No matter which app works best for you, remember to always track your mileage, and not leave money on the road!
As always, don’t hesitate to call if you have any questions regarding tax deductions that benefit your small business.
San Jose: (408) 252-1800
Watsonville: (831) 726-8500
