A fleet tracking system for mileage deduction

Graham Wood 03/22/2019 Vehicle Management

Sorting out and validating business trip expenses can be complex, that’s why you need a fleet tracking system for mileage deduction.

Whether you are a business owner or an employee, at one stage during your working life you will have had to do travel expenses. And may be a real pain at times, but we all know it’s worth it in the end, since nobody wants to be out of pocket.

There are many deductible expenses to take into account for any business and its employees, especially when vehicles are in the equation. But one of the most important is for fuel costs, i.e. mileage deduction.

Why you need a fleet tracking system for mileage deduction

In effect there are two main problems which a fleet tracking system for mileage deduction solves. And they are as follows:

  • “I need to know which trips are business trips, so that I can send a log to my accountant for deductible expenses.”
  • “It takes too long to gather up all information about all business trips, concerning deductible expenses, to send to my accountant.”

When you own a business or you are an employee and you use your company’s vehicles or your personal one for business purposes, then for those journeys you are entitled to deduct any expenses incurred.

What other expenses fall into this category? Fuel costs, oil, tolls, parking costs and fees for starters. You can verify all of these through your credit card, or you can even keep your receipts if you’re “old school”.

Spotlight on mileage deduction

In this post, we want to cover the main points about mileage deduction. Which involves basically all the miles that are covered when an employee is working.

Examples of professionals and use cases

Let’s look at some of the main occupations where this comes into play a lot. We can shortlist them to these below:

  • Independent contractors
  • Small fleet managers and employees
  • Facility trucks managers and employees

OK so which trips would be eligible for mileage deduction? This will vary from company to company, but in general, the kind of trips where a tracking system for mileage deduction will help are the following:

Journeys:
  • From your main office to another building, branch or facility of your company
  • From your office or building to a bank, to a post office or generally when you’re driving somewhere to complete business tasks
  • Driving to and from the airport and/or train station, etc for a business trip
  • From your office to a customer’s office/house and/or delivery point

On the above there will also sometimes be exceptions. Such as if you employer pays you a certain agreed amount for these kinds of expenses in advance or part of your salary then you will not be able to use/claim these miles. Also, usually driving to and from work is not typically considered as a deductible expense.

Now, here’s where a fleet tracking system for mileage deduction really gives you its value for money. For any business related trips that you want to claim as expenses, you need to have ALL of those in fine detail, down to the last mile - or even half mile. Sorry for all you drivers or employees out there, but your coffee consumption and food are not included! :)

Usually claims are made on an annual basis but some companies also do it on a monthly or quarterly basis. In order to claim the exact amount - so neither side is out of pocket - you need a record of all of those miles. With a fleet tracking device, you can have them saved and ready. Easy peasy! Then you simply go off the rules and the rates per mile that the IRS (Internal Revenue Service - if you are in the US) provides to make claims.

Business mileage sorted…

As you can see, in all of the above cases, a fleet tracking system for mileage deduction would help no end in making sure that all of the kinds of expenses which come up are then allocated correctly. This means that nobody is out of pocket and everybody’s happy.

So then, to track is to know, and to allocate expenses fairly, and thus streamlining any business expenses involving fleets of vehicles.

P.S. want to know more ways in which a fleet management app helps your business? Find out more here.