More Than Accounting

Record Keeping Tips: Automobiles

Posted by Rhonda Spaulding on January 24, 2008

The last post gave you some information on how to deduct business mileage. Along with those deductions come record keeping requirements. The IRS requires that you log all business miles in a timely manner. There are many court cases that the IRS has won simply because the taxpayer did not keep adequate records. This is an area that requires discipline. Unfortunately, business owners are usually busy running the business and do not always have time to “jot down” the odometer reading every time they run to the post office. How can you maintain adequate records without pulling your hair out?

Like me, I am sure that many of you were not “born organized”. We have to work at it. So, I have done some searching and tried to come up with some tips to keep your mileage logs simple, yet sufficient.

  1. Write down the beginning odometer reading. This is the beginning of the year (so do it now!)
  2. Keep a calendar or some kind of notebook where you can write down the business trips you make. This does not have to be a separate formal log. You can write things on your regular calendar or store it on your PDA. Just keep it somewhere convenient so that it is easily accessed.
  3. When you make a trip for your business, jot down the place you went. You do not necessarily have to set your trip meter and mileage every single trip at the time. Just note the “to” and “from” locations on your calendar.
  4. Periodically, tally up the miles you have driven from your notebook. These can be logged right there in your notebook. You can get mileage to your locations easily using the internet these days, it is just a click or two away. I would suggest you set a time to do this once per week. Put it on your schedule and set aside a few minutes to get everything up to date, otherwise it will probably become overwhelming if you do any significant traveling. If you are not into details, maybe you ask your spouse or another person who does the details to perform this step.
  5. Make a copy or back it up! If you store this information on paper, make copies periodically as well. Maybe you can do this weekly or once a month depending on the volume. If it is stored on your PDA or computer, do I even need to say back it up?!
  6. Periodically write down your odometer reading or keep your maintenance records which will probably provide that information. Maybe you do this when you get an oil change. Just make sure you get a reading for the end of the year.
  7. Finally, keep your receipts for your actual expenses. One idea might be to put a coupon organizer in your glove compartment and toss in receipts as you get them. Keep your insurance bills and other information in a special file in your office.
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