As a small business owner, one of the easiest ways to maximize your deductions and save on taxes is by accurately tracking your mileage. Whether you’re using your personal vehicle for business trips or maintaining a separate business vehicle, keeping detailed records of your mileage can help you claim deductions at tax time. Fortunately, QuickBooks offers a simple way to track your mileage, making it easy to stay organized and compliant with IRS guidelines.
Tracking mileage isn't just about saving money on taxes. It’s also essential for maintaining clear financial records and ensuring that your vehicle expenses are accurately categorized. The IRS allows businesses to deduct a certain amount per mile driven for business purposes, making it a valuable tax benefit. By using QuickBooks, you can:
Easily record trips: Track the start and end of each trip, the distance traveled, and the purpose of the trip.
Maximize deductions: QuickBooks automatically calculates the deductible mileage, helping you take full advantage of tax savings.
Keep accurate records: It provides a clear and organized log that you can refer to during tax season, or in case of an audit.
Before you begin tracking mileage, you need to ensure that QuickBooks is set up to capture your vehicle expenses. Here's how to get started:
Log in to QuickBooks Online.
Go to the Gear Icon in the upper right corner and click on Account and Settings.
In the left-hand menu, click on Expenses.
Under Categories, ensure that Mileage is listed as an expense category. If it’s not, click on Edit and enable it.
Save your changes, and now you're ready to start tracking your mileage.
Once your QuickBooks account is set up to track mileage, you can start recording your trips. QuickBooks makes it easy to add mileage either manually or automatically, depending on the features available in your plan.
If you’re on the go and want to make mileage tracking easy, you can use the QuickBooks Self-Employed mobile app, which offers automatic mileage tracking. Here's how to use it:
Download the QuickBooks Self-Employed App from the App Store or Google Play.
Open the app and sign in to your QuickBooks account.
Go to the Mileage section within the app.
Enable GPS Tracking: QuickBooks will automatically track your trips when you drive, logging the distance, time, and route.
Once your trip is recorded, the app will ask you to categorize the trip as either business or personal.
Review and Save: You can review all tracked trips and save them for later.
To record a mileage trip manually, follow these steps:
Click on the + New Button in the left-hand menu.
Under Other, select Mileage.
Enter the following details:
Date: The date of the trip.
Vehicle Used: Select the vehicle you used, if you have multiple vehicles listed.
Trip Start and End: Enter the starting and ending locations of your trip, or the total distance traveled.
Purpose of the Trip: Categorize the trip as either personal or business. For deductions, it should be business-related.
QuickBooks will calculate the mileage deduction based on the IRS rate for business miles driven.
Save the Trip.
To ensure you’re claiming the correct deductions, make sure that each trip is categorized properly in QuickBooks. QuickBooks will ask you whether the trip was for business or personal use.
Business trips: These are the trips that can be used for deductions.
Personal trips: These trips won’t count towards your deductions but should still be tracked for accurate mileage reporting.
Categorizing trips accurately is crucial because the IRS allows deductions only for business-related mileage.
One of the most powerful features of QuickBooks is its ability to generate reports based on your tracked mileage. These reports can be useful for tax preparation or for any business expense analysis.
Go to the Reports section from the left-hand menu.
Search for Mileage under the “Frequently Run Reports” section or click on Mileage by Vehicle.
Review your report, which will show the total miles driven, the business miles, and the amount deductible based on IRS rates.
Export to Excel or PDF if you need to submit the report or save it for your records.
These reports make it easy to track your mileage over time and ensure that you’re maximizing your tax deductions.
It’s important to maintain a clean and organized mileage log throughout the year. Whether you’re tracking mileage manually or automatically, make sure to regularly update your records in QuickBooks and back up your data. This will ensure that your mileage records are always accurate and available when tax season rolls around.
Tracking mileage doesn’t have to be a hassle. QuickBooks provides a simple, efficient way to track your business trips, ensuring that you never miss a deduction. By setting up your account, recording your trips, categorizing them accurately, and generating reports, you can keep your accounts organized and take full advantage of tax deductions.
Remember, whether you’re using the manual entry method or the automatic tracking feature through QuickBooks Self-Employed, consistency is key to maintaining accurate records. So, get in the habit of logging your trips regularly, and let QuickBooks take care of the rest!