How do I keep track of my miles?

From Business School 101

and Alamo Bookkeeping Associates

Alright, so now that you know you should be keeping track of your miles or your actual auto expenses, just how do you go about doing that?

Obviously, if you are going to use actual expenses (the hard way), then save your receipts and keep track of them in your bookkeeping. If you are going this route you will probably accumulate a lot of receipts, especially for gas.

If you are going to do it the easy way, that is, track your miles, then all you need is some type of journal to write this in, such as a calendar, notebook, etc. There are actual mileage log books available at office supply stores, but you don't really need one as a small calendar will do.

What are the things you should be noting in your journal or calendar?

1. The miles to/from the location you are doing business at. For instance, you are an interior decorator, so you have to travel to a house. The house is 15 miles away from your office. So you would track the 30 miles round trip. If you are traveling from your home to the office first, then going to the client's house, the miles to your office don't count. Those are considered commuting miles to your office. If you are going from your home to the client's office, those miles do count. Commuting to or from your home to your office is not a tax deductible expense.

2. The dates you traveled. This should be plain and simple. However as my personal experience has taught me, most business owners forget this part. They usually remember the trip, however they often can't remember when they took it. Sometimes they even confuse which year they took the trip. This is why you should keep a log, and write things down as they happen. Most of us can’t remember where/when we went this past week, much less months ago.

3. The purpose of your trip. For example, you went to a tradeshow about interior decorating in another city. You would note on your calendar, "trip for trade show". You went to a client's house to take measurements for curtains. You would note, "trip to client X’s house. "

Keeping this log will kill two birds with one stone, you have a record for yourself and for the IRS, should you need to provide proof.

Next- A tricky thing called office expense.

What other things should I be keeping track of?

From: Business School 101

and Alamo Bookkeeping Associates

Well there are lots of them, however I will discuss some of the big ones. The main item I see fall through the cracks is mileage for use of your car/truck, etc. and office expenses.

There are two ways to record car expenses; the easy way and the hard way. The hard way is to keep track of all your actual expenses. These are: gas, repairs and maintenance, insurance, and a tricky item called depreciation of your vehicle. If your vehicle is considered a vehicle for hire, such as a taxicab, van, limo, bus etc, then you must track actual expenses; you do not have another option.

However if your vehicle is not a vehicle for hire then you have the choice of tracking your miles. This would be the easier way to record car expenses. This little item is often overlooked by business owners, especially new ones, who haven't got a clue how important this is. This item will usually turn out to be a large amount when tax time comes so it is very important that you keep track of it.

Next: how should I keep track of my miles?