Properly logging expenses in the books is a must for businesses for two important reasons. Firstly, including incomes and expenses in business reports is the only way to confirm that a company is operating lawfully. And secondly, many of the expenses are deductible from the amount to be paid to the IRS during tax season. Thankfully, online accounting software makes recording and categorizing business-related expenses so easy that it can be done by anyone within the company. This is more or less true for tracking business mileages, too, although in this case you may need to apply some tricks to record everything properly in the accounting software and simultaneously earn the biggest deductions possible.
Manually recording mileages isn’t recommended for many reasons. First off, this obsolete method kills the motivation for those logging driven miles because they’re constantly reminded of the hours spent on the road. Worse for the business, however, is that it also easily leads to calculation errors, which the IRS doesn’t take kindly to at all. It’s also a logistical nightmare for you and your accountant to collate all the logged mileage – such as with the receipts of additional expense.
Mileage tracking apps provide a solution for all of these problems. For starters, making a calculation error with such an app is virtually impossible since they always receive up-to-date information about the current mileage rates and therefore comply with IRS regulations. Then there is the fact that mileage trackers will activate automatically and can track a journey with 100% accuracy thanks to the phone’s GPS.
Features like the ability to capture receipts the same way as expense reporting apps, the option to decide which trip is business-related with a swipe of your finger, or cloud syncing – which allows you to send the necessary reports to your accountant easily – are just the icing on the cake.
Despite being just as useful as expense reporting apps, mileage trackers aren’t treated so well by online accounting software. In fact, out of all the specialized accounting solutions, it is only QuickBooks that offers this feature by default – and even that is limited to QuickBooks Self-Employed, the version catering towards sole proprietors. What’s even more frustrating is that other third-party solutions like time trackers and payment processors are supported and can be integrated into online accounting apps with ease, yet mileage trackers cannot.
This is pretty counterproductive in a world where cloud solutions must work in tandem to effectively reduce workload, but there is a logical explanation as to why mileage trackers aren’t on the list of apps that can be integrated into online accounting solutions. The truth is that mileage tracking is mostly a tax-related issue that’s often only really important for self-employed people or employees that are asked to use their own vehicles for business purposes. As a matter of fact, if the business that owns the vehicle being used for work, then only the operating expenses have to be recorded and then reported, which is something that online accounting software can do easily even without having to enhance it with third-party apps.
Since not too many mileage trackers are fully compatible with accounting solutions – and by that we mean those that don’t require bridging solutions like Zapier or OneSaas – it’s important to know which app is the one to go with.
In that regard, there are three applications for those who want to further automate the recording of tracked mileages in their books. MileIQ and TripLog are as simple as a mileage tracker app can get and only focus on logging mileage. But whereas the former provides seamless integration with Xero and FreshBooks, the latter is for QuickBooks users who aren’t on the Self-Employed plan. Alternatively, there is Hurdlr, which integrates with Xero and FreshBooks and, unlike the previous two apps, is a full-fledged expense reporting solution that’s also capable of immediately calculating the tax deductions that you can earn from business mileages.
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