Whether you are self-employed or work for another company - as long as you drive your personal vehicle for business purposes - you can legally claim some tax deductions or reimbursement by submitting your mileage reports. However, using logbooks and spreadsheets to track miles for each business trip can be time-consuming and difficult.
That is why you need a mileage tracking app to streamline the entire tracking process, eliminate documentation errors, and keep your mileage reports IRS-compliant. You can also save yourself the hassle of manually recording trip dates, total miles, and other log details required by the Internal Revenue Service.
Apps for tracking mileage work in different ways. Some mileage tracking apps use GPS, while others auto-track miles using motion detectors to sense speed changes. A few of the best mileage tracking apps combine both for more accuracy.
Once you put on a mileage tracking app, it follows your preset route and calculates the time spent to get to your destination before estimating your claimable deductions. In situations where you forgot to track your trip, you can just go back to the app and add it manually.
The IRS requires business owners to record tracking details like trip time and destination on a paper form for tax audits. Employees must also submit mileage reports to receive reimbursement from their employers. But things could take a bad turn if you rely on the paper and pen method.
So if you want to steer clear of documentation stress and tax nightmares resulting from improperly documented mileage reports, a mileage tracking app should be your next go-to option.
The best of mileage tracking apps like Mileafy use GPS to track your real-time miles accurately and document important information such as the location and time of each trip.
You can create a trip manually on Mileafy when you start a business trip and end it after getting to your destination. Mileafy also offers a motion detection feature to automatically track your miles when you exceed a certain speed.
These features ensure you don't miss out on any claimable miles, which could result from calculation errors when using paper log books or spreadsheets.
Using mileage tracking spreadsheets or handwritten paper books to log miles is one of the most effective methods of recording mileage. But it's only effective for the first few weeks or if you drive less than 50 times a month.
If you go on business trips a lot or travel far distances for business purposes using your car, you can't always jot down the details of each trip. Moreover, sitting down to calculate your claimable costs every time you make a work trip is time-wasting - not to mention the human errors made during calculations. And that can cause you to lose some dollars.
Alternatively, apps for tracking mileage can save you the hassle and help you skip all the traditional touchpoints. That way, you can focus your time on vital things and save yourself unnecessary loss.
Data loss for mileage data recorded on papers and spreadsheets often occur due to fire damage, misplacement, security breach, or theft. On the other hand, mileage tracking apps save your data through iCloud synchronization, which is only accessible to you.
You can also skip the stressful calculations since a mileage tracking app like Mileafy will automatically help you sort those out. All you need to do is go to the export section on your dashboard and export the tracking reports in the available format. The generated report includes essential details for an IRS-compliant report needed for tax auditing and deductions.
You can also print your reports as hard copies or share them digitally.
There are so many disadvantages that come with tracking miles using spreadsheets. Some include errors in calculations (as previously discussed), data misplacement, and forgetting to document previous trips. And while it might cost you less money to use spreadsheets, you also need to factor in these possible losses - which weigh more than the gains.
Therefore, it is highly recommended that you use a mileage tracking app. A mileage tracking app for business use like Mileafy can help you maximize your business's tax deductions and save you lots of valuable time by preparing your log files in a ready-to-audit state.