The functioning of a business is associated with on-going transportation instances, that involve the movement of people, inventory, and machinery from one place to the other. Client and customer meetings, deliveries, pick-ups, drop-offs, etc., are few of the examples of such instances. The transportation involves costs, which is an expense of a business and needs to be recorded not only for the organization’s purposes but also, for the Internal Revenue Service (IRS), which demands recording and reporting of such an expense.
This expense is noted down in a mileage log. A mileage log, or a vehicle mileage log, is a record of the miles of the vehicles that have been used for transportation. A mileage log is important to maintain due to the following reasons:
- It can help in fulfilling the IRS requirements and ‘timely and accurate’ records can be maintained and presented.
- It can help a business in tracking down its expenses.
- The expense would decrease the taxes paid by the organization, as it would reduce the profit. If an organization does not maintain its mileage log and is unaware of the expense, the higher profits would mean higher taxes.
- It can help in tracking the amount of reimbursement.
- It can help in knowing the condition of the vehicle as well as indicating the requirements of different mechanical tasks, like oil change, hence making the management of vehicle maintenance easy.
- It can help in segregating the personal and professional usage of the vehicle.
The organizations develop a template or use an already available ready-made format from the online sources or programs, such as Microsoft Excel, and customize them to track and record the mileage details. Furthermore, now, there are many mileage applications as well, in which one can easily record the mileage details on the go.
Apart from the choice of the template and the organization’s requirements, it is very important to keep in mind the requirements of the IRS so that the mileage records are acceptable to the IRS. In addition to the ‘timely and accurate’ record, IRS also has requirements for some other information, which needs to be recorded in the mileage logs, that includes:
- Total mileage with the odometer reading.
- Dates of business activities.
- Locations or destinations of business-related transportation.
- Reasons and purposes of traveling.
Based on the IRS requirements and the organization’s requirements, a mileage log may record varying details. However, the general details that are included in all the mileage logs are:
- Details of the employee, such as name and ID.
- Details of the vehicle.
- Details of the authorized person (who has allowed the vehicle usage).
- Types of fuel used, such as petrol, diesel, gas, etc. The vehicle might use different types of fuel. For instance, if it uses gas as a fuel, the mileage log would be referred to as the gas mileage log.
- Per mile rate or cost.
- Total expense for the time of use.
- Total mileage for the time of use.
- Total reimbursement for the time of use.
In addition to this information of total figures, the individual entries are recorded as well in the mileage log, which includes:
- Dates of the individual uses of the vehicle for the transport activities.
- Initial location.
- Details, such as the purpose of use.
- Initial odometer reading.
- Odometer reading at reaching the destination.
- The number of miles traveled in each activity.
- Reimbursement required for each activity.
The mileage records can be prepared on a daily, weekly or monthly basis, depending on the level of traveling involved and the type of business. This is applicable for the professional mileage logs. However, some people even maintain the personal mileage records, which they can either use for themselves to track their personal vehicle usage and condition or use them to enter the data in the professional mileage logs of their organizations.
The personal logs need not have a formal recording, but professional logs need to be formal and comprehensive so that they can be presented to the organization as well as the IRS.
It is not required to maintain the mileage logs for the vehicle owned by the organization only. As the transport cost is an expense, it needs to be recorded even in the case of the rented vehicles. The rental vehicle mileage logs also record similar details as are recorded in the mileage logs of the owned vehicles, with some variations.
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