Businesses come in many different sizes and natures. However, the primary governing principle for all businesses is that in order for a business to grow, you need to maximize revenue and minimize expenses.
Taxes are more than just an expense, they are an obligation that, when evaded, will have dire consequences for you and your business. And while that is the nature of taxes, the government tries to be as fair as possible to the citizenry.
Gone are the days when taxes were imposed regardless of how heavy they were for the populace. Modern iterations are much more reasonable. The best example of this is through business expense tax deductions.
What Are Tax Deductible Business Expenses?
Tax deductible expenses are almost any "ordinary, necessary, and reasonable" expenses that help to earn business income. These are basically expenses that are incurred as a result of operating your business.
These include general and administrative expenses, business-related travel and entertainment, automobile expenses, and employee benefits. Of these examples, what we want to focus on here are automobile expenses.
This is because there can be a significant amount of money spent on fuel and car maintenance that often goes unreported.
Mileage Tracking Explained — Why Is It Necessary?
However, applying for a tax deduction isn’t as simple as you might think. In order for a business to benefit from a business expense tax exemption, the applicant must be able to prove to the IRS that the expenses were incurred for business purposes.
There needs to be clear and concrete evidence that your expenses were truly business-related. This means that your records have to be timely and accurate and up to IRS standards.
The reason for this is simple. During an audit, you need to be able to prove that the miles that you’re asking to have deducted from your taxes are accurate. In order to prevent business owners from abusing this consideration, concrete proof must be presented to the IRS for them to verify the information that you’re sharing.
If you’re unable to prove your expenses, you may even be penalized for attempted fraud or worse, attempted tax evasion.
If You Want To Be Accurate, Opt For A Mileage Tracking App
Let’s admit that operating a business is a lot of work and that there’s rarely going to be time to manually log each time you take a business-related drive. Not only is it time-consuming, but it’s also subject to inaccuracies, the latter may even cause you unnecessary trouble with the IRS.
Mileage tracker apps make use of the built-in GPS of your smartphone to detect whether you’re driving or not, and will also automatically track the miles you’ve driven as well as the time and date of the trip.
Some mileage trackers like Hurdlr even save the information in a format that adheres to the standards of the IRS so all you really need to do is to print it out.
Taxes are a serious matter that every business must handle eventually. Eliminate the chance of an inaccuracy by making use of your phone to log your miles for you. This way, you’re able to dedicate your precious time to other aspects of running your business.