Tag Archives: mileage

You mentioned tracking mileage, why would I do this? And what should I do for this?

Great question!

The reason you track mileage is because you are likely running your business as a sole proprietorship, and therefore, you qualify for a lot of tax deductions.  One of them is a deduction for how much you use your car for your business.  If you do not keep track of how much you use your vehicle, you cannot reasonably deduct the use on your business.

This is what I recommend you do:

Purchase a notebook and get a pencil (helpful in cold climates)

On the first page, put your mileage the day you start your business, or the first of the year.  Record the mileage on the last day of the year as well.

Going forward record the following on each line:

Date       Starting Mileage   Ending Mileage   Destination

Jan 5       100,235                    100,263              Jane’s Party

I do not worry about calculating how much distance I went, as I enter this information into Excel at the end of the year and it takes care of the math for me.

When it comes to tax time, you take your ending mileage less your starting mileage, and you know how much driving you did for the year.  You can then take how much you drove for business (say 750) out of how much mileage you put on your car total (say 2000) and you will find 38% of the miles on your car were for business.

As a result, you can then use 38% of your vehicle expenses on your taxes.   You may be able to claim a flat fee instead for the miles you drove, which may be more beneficial.  You will want to discuss this with your tax person.

Accounting Scares me. What do I need to do?

Close-up of a graph from the financial section...
Stock market from Yuri Arcurs Website

Seeing as I am a bean counter by trade, I don’t think accounting is scary and I would recommend that you do more than what most people are comfortable doing.  That being said, here is what I think you do need to make sure to do:

Keep any paperwork associated with your business – Purchases, Sales, Website costs, Receipts for training or events you attend

Keep a Mileage Log – you will need this for tax purposes

Electronic Files – Save these somewhere as a PDF file (Broadgun PDF is a free program), as you never know when you may need these