Which Business Mileage is Deductible

If you want to lessen the costs of startup, it is important that you calculate the mileage by using a notebook at act as your log. Keep a notebook inside your car and take note of all business dealings or travels.

Be sure to take before and after odometer readings and from there, you can now calculate the consumption.

When you own a small business, you are likely to incur business mileage even if you’re using your personal vehicle. Whenever you use the car for purchasing supplies, or running to the post office, trade shows, and customers, you can take the mileage as a deductible. To make things easier, it would be an advantage if you keep a log of car usage and the miles you’ve covered. To determine the tax deduction, you can use two methods – actual cost and standard mileage rate.

Deductible Business Mileage

The simplest method that you can use is the SMR or standard mileage rate. For this, you will need a notebook that you can use to monitor business trips. Try to keep the notebook inside the car so that you can reach for it when you’re seated. Annotate the purpose for using the car and check the odometer reading. When you get home, you will again check the reading. Determine the taxable period and refer to your notebook. Add the total number of miles you’ve traveled and you have it. There is no need to record personal use since this is not deductible.

If you don’t have accounting software, that is not a problem. You can just use Microsoft Excel. The spreadsheet is great for these readings. You can do the calculations on a weekly basis or monthly/yearly. You can check with the IRS as to the standard mileage rate. When using the SMR, you can’t deduct for the maintenance, repairs, insurance, gas, and depreciation. You don’t need to maintain a log if you have a vehicle that is used exclusively for the business. You will simply take note of the odometer reading at the beginning of the year and deduct it from the reading at the end of the year.

Why should you calculate for the business mileage? The answer is too obvious. You see, if you know the figures, you will be able to reduce the overhead costs of the business. Just imagine how much you can save if you know the exact mileage that is used for business purposes. You can do the calculations on your own or you can also hire a professional. You don’t have to spend a fortune on the gas costs and other business related expenses. Check with the state’s guidelines when it comes to business mileage. The tax laws usually differ from one state to another. Take your time in studying which laws are applicable and the ones that are not.


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