Are you adequately documenting your business expenses?  There are several regular expenses that often don’t get documented very well.  These are vehicle miles, meals & entertainment and business travel.  In this post we’ll look at important factors when documenting business mileage.

Total Miles

Mileage is the one deduction that many seem to have the most trouble with.  You want to note your odometer reading at the end of each year so that you know how many total miles were put on the vehicle.  This is an important starting point.

Business Mileage

Whether as an employee, contractor or business owner many of us incur business mileage.  It’s important to find a systematic way of recording these miles.  Very often a vehicle is used both personally and for business.  There may even be commuting miles to track.

All business expenses must be reasonable necessary and clearly serve a business purpose.  When documenting mileage you want to keep this in mind. 

Documents you should keep

How you document your miles is up to you.  I use a day planner.  This is a convenient way to note the business activity (client meeting, pickup supplies, sit visit, etc.), who was involved, where it occurred.  When it is a regular client, it is sufficient to have my accounting records to support that location.  If possible write odometer readings.  Otherwise keep track of the total mileage.  For those that get busy, you can go on the internet later and use any map program to find out the mileage between destinations.  

Supporting Information

If you decide to use a day planner this will become part of your tax records that you will need to keep.  You may still want to summarize this on a spreadsheet or in your day planner.  By summarizing this data you can save yourself time and money later on your taxes.  I generally summarize weekly and monthly while it is still fresh.  Never know you might forget something during a hectic day.  If all your days are hectic , you better get in the habit of summarizing at the end of each day.