As a business owner, you know that small savings add up! If you want to increase your tax savings, read on!
Consider how much you drive for your business. Do you go the bank? Meet clients? Go to networking events? Visit the office supply store? If you answered yes to any of these questions, it's time to track your mileage!
By tracking your business miles, you can increase your tax savings with each mile you drive!
To claim a tax deduction, you need to record and include:
(1) the business purposes of the trip
(2) the date
(3) the destination
(4) the miles drive per trip
One of the problems with mileage is remembering to track it consistently and in a way you can easily manage receipts for gas, parking, and tolls. With the arrival of technology, companies have designed helpful apps to help you manage this piece of your business.
The two options I've used to track my business miles are QuickBooks Online (QBO) and Drivers Note.
QuickBooks Online offers mileage tracking at no additional cost for any of their subscription plans. By logging in, you can easily record individual trips, update your vehicles, and see your total miles to date. Alternatively, by using the QBO app on your smartphone, you have the option of selecting the auto-track feature to track your mileage so that you do not have to remember to log each trip. Then, you would classify these trips as business related and have QuickBooks Online save them for safe keeping until tax time!
If you are not using an accounting system, try the DriversNote app that provides you with a digital mileage log book. This is a subscription-based app that offers both a free plan and a paid plan. The free plan tracks unlimited miles each month and allows you to export reports to Excel or PDF. It also includes an auto-track option that uses your smartphone's GPS so as you are on the move, your app is tracking miles for you. You then review your trips and categorize them as business or personal. And just like that you have effortlessly created tax compliant reports for your tax preparer.
Whichever method you choose to use, they key is to find something that is easy to use and helps your remember to do it! Start working on your tax savings today!