Get Tax-Free Money From Your Business with a Mileage Reimbursement!
As small business owners, it can be hard to make ends meet. With the end of the year approaching, it’s time to start closing out the books and preparing for tax season. Many of you probably already write off tax deductions such as gear purchases, work-related meals, and travel expenses such as airfare or hotel costs? But did you know that you can also take a deduction for driving your car? Learn how to do a mileage reimbursement and get money back in your pocket.
The IRS offers most business owners 2 options:
- You can track the number of miles you drive specifically for business purposes and deduct a flat monetary rate per mile (currently 57.5 cents). Of course, you have to track your mileage in order to do so.
- Or, you can deduct a portion of your actual vehicle related expenses such as maintenance and fuel. But in order to know exactly how big that portion is, you have to know what percentage of your driving is for business… which generally involves tracking your mileage.
So either way, in order to properly deduct your vehicle expenses, you’ve got to be tracking your mileage. We prefer taking the mileage reimbursement deduction rather than the actual expenses deduction. At indigosilver, since we are a partnership LLC, each of us submits our mileage reports to the studio in order to receive a tax-free reimbursement check to the tune of 57.5 cents per mile. The studio then reports that as a business deduction come tax season. Win/win!
How many of you actually track and write off your business related mileage? I can tell you I’m the worst for remembering to write down my mileage. And even when I do, I often forget to write down the ending mileage, resulting in a loss of mileage reimbursement for my vehicle expenses! No more my friends… no more. I found something amazing!
Introducing MileIQ! A mobile app that runs in the background on your smart phone automatically tracking your drives! Simply make sure the app is running and go about your day. Using your phone’s GPS (I’m guessing), the app senses and records when you are driving. At the end of each day you’ll be notified that you have drives that need to be classified. Opening the app reveals “drive cards” showing both a starting and ending point of each drive in a thumbnail view of Google Maps.
Each drive card not only shows the origin and destination of your drive, it also has an area for notes, tolls, parking, or any other expenses associated with the drive. You can also name frequently visited locations so that you can easily identify them in the future. Once you have all the drive information documented, simply swipe left to categorize the drive as personal (no tax deduction), or right to categorize it as business (deduction!). A swipe and hold reveals a custom purpose menu where you can further sub-categorize your drives. This is great if you want to classify client meetings, portrait sessions, weddings… We follow Professional Photographers of America’s Annual Benchmarks for managerial accounting, so we further divide our travel purposes into either Administrative or Cost of Sale. You can set up your own categories to be as complex and specific as you want.
Once your drives are categorized, you’ll see you’re a running total of the mileage reimbursement you are owed in the top right corner. I like seeing that number, I’m not gonna lie! That number is money that’s coming back into my pocket! At the end of each month, I simply tap the “arrow up” icon in the upper right corner, choose the month, and submit my mileage report. I didn’t realize how much money I was leaving on the table until I downloaded this little app! Now, each month, we’re logging anywhere from $200-450 in business travel.
While the app alone is pretty amazing, the desktop interface is even more powerful. Through the online interface, you can run powerful year-to-date mileage reimbursement reports, edit drives, and merge trips together.
Get MileIQ from the App Store or Google Play store or by visiting mileiq.com. Start earning money today when you drive your personal car for business purposes! At only $5.99/month or $59 per year it’s been well worth my money!
DISCLAIMER: The Shoot Space is not affiliated with MileIQ in anyway. You should consult your accountant to verify which of your business mileage is tax deductible.