How to make the most of deductible vehicle expenses for contractors

Graham Wood 02/07/2020 Vehicle Management

Deductible vehicle expenses for contractors you say? As a self-employed contractor or business owner, you are always looking for ways to make the most of your tax deductible vehicle expenses. These are expenses that are necessary and relevant to your business, especially if you own one or more vehicles that you have for commercial use.

Whatever kind of contractor you are, be it electrical, plumbing, construction, service, engineering and roofing - among others - you may have a clear picture of the what self-employed vehicle expenses you are eligible to deduct. Or maybe you don’t, or perhaps you’re somewhere in the middle?

The main thing to understand, if you haven’t already, is that after your own personal health, the health of your vehicle is the single most important thing to your business. Without it, you can’t get around to your appointments, sales calls, supply runs, and so on. You need to keep your vehicle(s) in good shape. Basically you can’t run your business without it.

Well, that’s a given, you may point out. And you’d be right. But then again, even with that realization and knowledge, there still may be many ways that you can benefit; in terms of cost-savings with the correct use of deductible expenses. Vehicles are costly, but at the same time priceless. Some expenses are easier to control than others, of course. But apart from good maintenance and management, you can also try to make the best out of uncle Sam; hence deductible vehicle expenses for contractors.

What are the main deductible vehicle expenses for contractors

You may not know each and every deductible expense, but the main ones that apply to contractors are the following:

  • Gas and oil
  • Mileage deduction
  • Maintenance and repairs
  • Tires
  • Registration fees and taxes
  • Licenses
  • Vehicle loan interest
  • Insurance
  • Rental or lease payments
  • Depreciation
  • Garage rent
  • Tolls and parking fees

It’s a lot, right? Apart from the above, you also have your “regular” expenses to deal with; such as payroll, utility bills, equipment purchases, rent, etc.

So it’s important to make the most of those deductible vehicle expenses for contractors. And bear in mind what also can effect the costs associated with them. For example, good (or bad) maintenance, drivers’ behaviors and the like all affect a vehicle’s health; as well as its gas consumption. Bad maintenance, for example, can lead to high repair costs, and poor driving behavior, like parking illegally, can lead to towing costs.

Measure your deductible expenses effectively with a fleet management solution

How can you measure your deductible expenses effectively? There are many ways and means, and in our view, using a fleet management solution like our very own Veturilo, a solution especially for small to medium-sized businesses, can help you.

Why you need a fleet tracking system for mileage deduction

Effectively, there are two main issues which a fleet management system for tracking mileage deduction helps to manage.

They are as follows:

  • “I need to know which trips are business trips and which are personal, so I can send a log to my accountant for the deductible expenses.”
  • “It takes far too long to get all information about all business trips, concerning deductible expenses, to send to my accountant.”

When you’re a contractor or own a business and use your company’s vehicles or your personal one for business purposes, then for those journeys you are entitled to deduct any expenses incurred (check the full list further up).

As well as helping define and divide your deductible expenses, however, with a fleet tracking solution or app, you can also make better cost savings. How? Because you can monitor so many different things and take action to prevent unpleasant situations (such as towing), keep a close eye on gas/fuel consumption, and limit bad driving behaviors that force you to spend more on maintenance. In general, you can ensure that your vehicle(s) health is in tip top shape and always on duty to serve your business and your customers.

Finally…

Deductible expenses for contractors can be a tricky area to negotiate. But with good management, and a fleet management app to help you not just with mileage but with the plethora of other costs you can deduct as a small business owner, you will be on the right track.

Not only that, you can know, and to allocate expenses fairly, and thus streamline any business-related expenses involving your vehicle(s).

If you want to learn more ways in which which a fleet management solution can help your business, check out our post here.