If growing revenue and maintaining cash flow are among the top concerns for small business owners (spoiler alert: they are), then finding ways to generate and maintain a positive cash flow is always top-of-mind. One place you might be overlooking when it comes to cost savings? Your car. And specifically, the mileage you put on it for business purposes.
One way that solo entrepreneurs and small businesses might suffer is simply not being aware of the types of drives that qualify for mileage deduction. And lack of knowledge here is costly; not tracking business mileage can translate to thousands of salvageable dollars out of pocket*.
Here are five monetary lane changes you can make when it comes to tracking mileage:
1. Track each and every business drive…once you know what those are
For every work-motivated mile you drive in 2016, you’re entitled to 54 cents—which sounds like sofa change until you consider all of the deductible activities you’re likely performing on a daily basis.
A “business drive” includes travel between your primary place of business and secondary place of business, meetings with clients (yes, that includes meeting them for lunch at that new, hot Thai place), trips to and from the airport, and business-related errands like trips to the office supply store or post office. Be careful though: not all behind-the-wheel moments are candidates for a mileage deduction. Commuting, (driving between home and work, when home isn’t your primary workplace), for instance, is never deductible.
2. Count medical, charity, and moving mileage
It may be surprising, but while you’re looking out for your well-being and the well-being of others, you also can be looking out for mileage deductions. Beyond being intrinsically rewarding, volunteering your time is also a deductible activity to the tune of 14 cents per mile on your way to and from your local hospital, homeless shelter, or other charitable institution. Going back and forth to the doctor is a deductible expense at 19 cents per mile, and for certain moving activities, you can deduct your gas and oil expenses, or 23 cents per mile.
3. Deduct parking fees and tolls
Meeting a client in the city? Heading over the river to drum up new business? When you’re on a business-related trip, those pesky fees for parking or crossing a bridge can be deducted, too. Though beware: you’re not absolved from all parking costs; fees like those that accompany a dreaded parking ticket don’t count (so keep it off the red curb, and feed the meter).
4. Work from home—and deduct for it
Is your home office your main place of business? If so, you have a loophole to the aforementioned commuting rule. Since you’re already “at work,” trips from your home office to another work-related destination count for a mileage deduction. To be sure you qualify for the mileage benefits that come with home office deductions, check to be sure your office qualifies.
5. Meticulously maintain your mileage records
While the benefits of tracking mileage are real and substantial, you can find yourself caught in an IRS nightmare if it’s not done right. To avoid audits and penalties, record your mileage in a logbook or spreadsheet. And if the manual way isn’t your style, look into a more automated method; tracking apps available today, for instance, can save you the time it would normally take to do the traditional bookkeeping, and help you avoid mileage deduction errors.
Reducing utility expenses, going green, reviewing spending—you’re already finding ways to save where it counts in your small business. As you do, take our advice: don’t disregard the driving.
*Disclaimers and Disclosures: This post, nor any statement made herein, is not accounting advice and should not be construed as such. You should always check all deductions with your accountant. Furthermore, the opinions expressed (and other content) in this article are those of the author and not of Carol Roth, Intercap Merchant Partners, LLC or related entities and have not been independently verified.)