Mileage tracking is recording your mileage of business driving to either collect reimbursement for personal vehicle use or tax deductions. If you’re a business owner or a freelancer, then you know that transportation costs can add up. That’s why mileage tracking is so important. It helps you stay organized, allocate expenses accurately, and budget better. We will discuss the importance of mileage tracking for both businesses and freelancers. We’ll also show you how DRIVE Anywhere can help you track your mileage more effectively.
Why Businesses Need To Track Mileage
Businesses need to track mileage for a lot of reasons. First, it helps them better allocate expenses. Allocation is important because it allows businesses to budget for fiscal years. Second, tracking mileage is essential for employees getting reimbursed for work-related transportation costs.
Allocating Mileage Expenses
Allocating expenses is nothing new for businesses. One of the biggest areas ripe for improving allocation is planning for mileage reimbursement. Before mileage tracker apps, businesses would take their employees’ word for business miles driven. Tracking mileage on paper can create problems such as productivity declines. Using an automated approach to mileage, tracking impacts every aspect of allocation.
Budgeting and Planning
Having a clear idea of how much your company is spending on mileage reimbursement presents the opportunity to better plan for the future. Budgets allow you to make projections to make large decisions. An example is providing company cars if mileage reimbursement is more costly.
Improve Financial Management
Financial management begins with identifying spend that benefits the growth of the company. We mentioned earlier about deciding to buy company vehicles or reimbursing miles. If you already have a fleet of vehicles, do you know if those vehicles are being underutilized? The truth is you won’t unless you are logging the mileage of those vehicles. Mileage tracking provides low hanging fruit companies can identify areas of spending to cut back on.
Compliance with Regulations
In the United States, there are a several factors to consider with mileage tracking. Businesses need to consider IRS-compliant mileage logs, the Fair Labor Standard Act, and state labor laws. Manually recording and storing these records can become cumbersome for many organizations.
The United States isn’t the only country with documentation requirements. India, for instance, has to consider tax regulations as well. Regulation of mileage reimbursement is by the Indian Income Tax Act (IITA) of 1961. Under IITA, employers must provide untaxed reimbursement for business mileage. Employees must provide proof of mileage. Implementing a mileage tracking app is crucial for accurate mileage reimbursement, as required by law.
Transparency and Accountability
Having accurate mileage tracking allows both transparency between the employer and employee. Empowered with data, employees know they can trust their company will reimburse miles correctly. Businesses have data to see if employees are spending company resources appropriately. Having transparency and accountability is important for any company’s culture and success.
Reimbursement for employees
Bad actors are out there. Taking longer routes, fudging miles, or creating false reports is an issue that is rampant with mileage reimbursement. Forced to act, companies will delay reimbursement. This penalizes those who follow the rules and is damaging to the company’s reputation.
How to Improve Mileage Tracking for Businesses
Businesses have two options for recording mileage. They can either manually record mileage or use mileage tracking apps. Depending on the needs of the business, it can make sense to improve the manual recording of business mileage. For businesses that find themselves on the road, often, the best way to record business mileage is to use a mileage tracking app, like DRIVE Anywhere.
Improving Manual Mileage Tracking
Having built a mileage tracking app, we have a few pointers to help your employees better track their mileage manually. The best manual method is to keep a physical mileage log book. You can get these for under $10 on Amazon. Employees will then either need to digitize the data or upload scans of their logs.
If the line of work your company does is outdoors, paper log books can get destroyed. You could consider creating a Google Form like this to record mileage. These forms are pretty simple to set up. Before their drive, employees record trip details and the starting odometer reading. They’ll then submit a second entry to record their mileage at the end of the trip, along with notes. You will then need to manipulate the Google Sheets document to sort and create usable and reportable data. While semi-automated, this method still has it’s issues, such as lack of GPS tracking.
While these methods are functional, they offer little else in the way of ease of use. With the lack of automatic mileage tracking, mobile employees may forget to log miles. There are more efficient ways to record business mileage that support ease-of-use.
To see if your company can save money with DRIVE Anywhere, check out our free calculator.
Why a Mileage Tracker App is Efficient
Tracking mileage thats easy for both the driver and accounting departments is achievable through mileage tracking apps. These apps cut out the hassle of maintaining a mileage log. DRIVE Anywhere, uses GPS technology to generate easy-to-understand reports that are accurate. When factoring in the cost of manual reporting, applications like DRIVE Anywhere are a no-brainer.
Why Freelancers Need to Track Mileage
As a freelancer, must to keep track of your mileage for several reasons. Planning to claim vehicle expenses for work-related travel? You will need to have an accurate record of the distances traveled. It’s aso important for recouping costs from clients to make sure you stay within any relevant tax regulations.
Secondly, tracking your mileage can help you budget and plan for future travel costs. Knowing how much you spend on travel in a year can help you price your services better.
Third, keeping track of your mileage can help to keep you more organized. If you have a clear record of all the places you’ve traveled to for work, it will be easier to keep track of deadlines, appointments and other commitments.
And finally, tracking mileage will help maximize your tax deductions come tax time. A common myth is that tax deductions for milage worth the time. Consider U.S. tax deductible miles. In the U.S., as of February 2023, U.S. drivers can deduct 58.5 cents per mile. We’ll discuss this in greater detail shortly.
It is clear that there are many benefits to tracking your mileage as a freelancer. Whether you’re looking to claim expenses, budget better or stay organized, this simple task can make a big difference.
Is it Worth Tracking Mileage?
The short answer is yes. At a reimbursement rate of 58.5 cents per mile, you can’t afford to not track your mileage. When you aren’t recording your mileage, you are leaving money on the table. Depending on how much you drive, you could be leaving hundreds or thousands of dollars behind. Tax-deductible miles also impact small business owners, so freelance workers aren’t the only ones who need to focus on mileage tracking.
Should you Track your Mileage for DoorDash?
There aren’t hard and fast numbers on how much a DoorDash driver drives. This YouTube creator estimates they’ve driven at least 26,000 miles a year DoorDashing. At 58.5 cents a mile, how much do you think their tax deduction would be?
The potential tax deductions this driver could have collected is around $15,200 dollars. We don’t know about you, but that’s nothing to sneeze at. Should you track your milage for DoorDash and other delivery services? The answer is a resounding: YES!
Should a Rideshare Driver Track Mileage?
A typical full time driver for Uber or Lyft can expect to see more miles that can pad their tax return. The average full time ride share driver in urban areas can expect to drive anywhere between 30-50k miles a year. Drivers who don’t track use a mileage tracker could be leaving anywhere between $17.5k to an outstanding $29K+ a year in the rear view mirror. It’s no question as to whether rideshare drivers should track mileage. It’s a must.
Check out this free calculator to see how much money you could get on your next tax return.
What Miles are Not Tax Deductible?
In the U.S. there are some miles small business owners and freelance workers can’t claim for a tax deduction. These are pretty easy to remember. You cannot claim your commute miles or personal miles. For rideshare and delivery drivers, if you drive to a different location to start your day, you cannot claim those miles as these are your commutes. Personal mileage is not eligible for tax deductions either. Be sure you are properly tracking, recording, and submitting the appropriate miles to your tax collection agency.
How DRIVE Anywhere Supports Both Businesses and Freelance Workers
DRIVE Anywhere is a mileage tracker app that offers a lot of features and benefits for both businesses and freelancers. For businesses, the app helps accurately allocate expenses, budget efficiently, and stay within regulation guidelines for mileage reimbursements. For freelancers, the app is essential for maximizing tax returns, planning, and making sure they receive proper reimbursement from clients. Overall, DRIVE Anywhere is for anyone who needs to track their mileage for business mileage reimbursement or for tax preparation.