Did you know the IRS allows you to write off business miles on taxes?
If your employees often travel using their vehicles for business purposes, it is considered as a business expenses. This can potentially lead to thousands of dollars worth of mileage deductions!
Do you want to claim these business mileage deductions?
If yes, the IRS requires you to track and provide proof of mileage spends in the form of mileage logs. Businesses can also use these records to calculate tax returns and justify deductions. This ensures your business stays audit-ready incase of IRS scrutiny.
Some mandatory categories for mileage tracking are:
- Accurate dates of travel
- Miles covered
- Start and end locations
- Purpose of travel
- Miscellaneous spends
Does your business have a process that helps employees maintain an accurate record of miles traveled? If not, read on to know how to make a mileage log and the best practices for tracking business miles.
Your guide to 2020 IRS mileage rate
Ways to track business mileage
Employees using their personal vehicle for business purposes, have to report their mileage expenses. He/she has to calculate the distance traveled to track all the costs associated with a specific business trip. This can include fuel, repairs, servicing, insurance, etc.
Tracking business expenses is a tedious and time-consuming task. But some businesses have understood how to streamline and ease this process. Here are some ways employees can easily track business:
- Logbooks and Spreadsheets
In this methodology, employees have to fill a logbook or spreadsheet at the time they take a trip. They have to fill the start and end destination and calculate the value between the stop. This becomes extremely tedious if an employee has multiple stops. This method is inexpensive and easy to get started but requires a lot of manual work.
- Mileage tracking apps
When employees use these apps, they simply have to add the stop and end destinations. The tracker app then calculates the distance between the destinations. It also automatically adds in the details into the app. The users can then directly report or save and report when they wish. This method has gained popularity over the years since it eliminates the tedious job of manual entry. Also, mileage logging can be done directly on a smartphone.
Why traditional methods of tracking mileage are not good enough
Your employees are your champions. Your sales folks often travel both locally and internationally to help meet clients and close deals. This may require them to have multiple pitstops and numerous mileage entries on a daily basis.
To add to their woes, they also need to keep track of business expenses incurred while dining and accommodating their clients. Once done with their client meetings, they also need to fyle for their expenses. This means hovering through hundreds of receipts and manually sorting them based on clients, projects, or other such categories. Once sorted, they need to enter these miles and business expenses on spreadsheets manually.
This can prove to be quite cumbersome for your frequent business travelers. Not to forget, the accompanying paperwork that goes in for manual verification to the finance folks. This spells disaster for both the finance team and your employees.
Why do employees find traditional mileage tracking frustrating:
- Tons of paperwork and Spreadsheets
- Time-consuming manual processes
- Unreported miles that do not get reimbursed
- Increase in turnaround time and delay in reimbursement cycles
- Decrease in financial productivity and employee morale
Why do employers and finance teams find traditional mileage tracking frustrating:
- Requires manual rechecking of reports to validate logged in miles
- No customization of fields to optimize or analyze spends
- Little to no insight on spending trends and policy violations
- Increase in mileage fraud and duplicate/incorrect submissions
- Decrease in financial productivity and employee morale
Manual trip reports are repetitive, mundane, and can severely affect the employee experience. Keeping employee satisfaction in mind, we have seen a growing trend where businesses are moving towards automation of mundane tasks. Automation has helped simplify various processes, and mileage tracking is one of them.
Solve mileage tracking woes with an automated solution
An efficient mileage tracking app or software is beneficial to both employees and businesses. Also, an automated expense management software can:
- Seamlessly facilitate mileage reimbursements
- Enable easy and well-documented tax deductions
- Provide real-time insight into business and travel expenses
- Enable finance teams with a centralized dashboard to get business insights
- Help cut down unnecessary leaks
Along with streamlining your expense management process, employees can seamlessly log in mileages, run real-time policy checks, detect policy, and more. It also helps curb fraudulent claims and allows you to stay audit-ready at all times. Therefore it accelerates the reimbursement cycles by up to 5x.
Let’s dig deeper into how automated mileage tracking can iron out the kinks in traditional mileage tracking methods.
Benefits of an automated mileage tracking app:
Automation is always a million steps ahead, and one of the reasons is multitasking.
Modern expense management is all about multitasking. With automation, users can fyle all sorts of business expenses under one platform. An automated expense management software can help you seamlessly scan your receipts, file travel expenses, request for cash advances, track mileage, and so much more.
Employee benefits of using an expense reporting app with mileage tracking:
- Automatic tracking of trips and fuel receipts
- No manual data entry due to automatic data extraction
- Automatic syncing with the cloud to keep a history of all your trips
- Easy categorization of trips as personal or business while fyling expenses
- A decrease in the time spent in fyling and claiming for expenses
- Shorter reimbursement times
Employer benefits of using an expense reporting app with mileage tracking:
- Enhanced employee experience
- Eliminates mileage fraud due to pre-determined rates for mileages
- Centralized platform to fyle expenses
- GPS-enabled feature to get accurate mileage
How Fyle’s mileage tracking and expense reporting stands apart
Fyle helps you simplify the process of mileage tracking even more. We try and go beyond automation and bring all your needs in one place.
How Fyle’s mileage tracking and expense reporting benefit employees:
- Unlimited mileage tracking
- Accessible on any mobile platform
- Make expense reports on-the-go
- Unlimited receipt scanning for any receipt incurred during the trip
- Reduced turnaround times
How Fyle’s mileage tracking and expense reporting benefit employers and finance teams:
- Google Maps to get accurate readings to validate logged in miles
- Customizable fields as per projects to help document entries better
- Well documented expense reports and digital audit trails
- In-depth insight into business spends, patterns and more
- Policy checks to keep the business trip expenses under a limit
With Fyle doing the heavy lifting, employees can submit their mileage reports with a few taps. Similarly, finance teams can directly approve expenses in a single click. This makes the entire process of expense reporting a seamless one.
Are you interested in trying Fyle to automate and streamline your mileage tracking and expense reporting? Schedule a demo with us today!