Maintaining a vehicle mileage logbook is an essential practice for anyone who uses their vehicle for business purposes.  Not only does it help with accurate record-keeping, but it also ensures compliance with tax regulations, provides evidence for deductions, and promotes efficient expense management. 

Whether you’re a business owner, a contractor, or an employee who drives for work, a mileage log book is a crucial tool for financial transparency and accountability. 

Here’s a closer look at why it’s important and how to ensure your records are accurate and useful for your bookkeeper and accountant.

 

Reasons to Keep a Vehicle Mileage Logbook

  1. Tax Deductions and Compliance One of the most significant benefits of a mileage logbook is that it enables you to claim tax deductions for business-related travel. In many jurisdictions, the tax office requires detailed mileage records to substantiate claims for vehicle expenses. Without proper documentation, you risk losing out on these deductions or, worse, facing penalties during an audit.
  2. Expense Tracking: A mileage logbook helps you track your travel expenses accurately. By distinguishing between business and personal use, you gain a clear understanding of how much you’re spending on fuel, maintenance, and other vehicle-related costs for work purposes.
  3. Proof of Business Use: If you’re using a vehicle provided by your employer or claiming car-related expenses through your business, you must demonstrate that the vehicle is being used for legitimate business purposes. A mileage logbook serves as concrete evidence of this usage.
  4. Improved Budgeting: With a detailed record of your vehicle’s mileage, you can better plan for fuel costs, maintenance, and depreciation. This is particularly helpful for small businesses or sole traders who need to manage cash flow carefully.
  5. Easier Communication with Bookkeepers and Accountants: A well-maintained logbook streamlines the process of reconciling vehicle expenses. Your bookkeeper and accountant can work more efficiently when they have access to accurate, well-organized mileage data.

Tips for Keeping Accurate Records

  1. Record Entries Promptly Make it a habit to record your trips immediately after completing them. Delaying this can lead to forgotten details or inaccuracies. Use a physical log book or a digital app to log mileage on the go.
  2. Include Key Details Ensure each entry includes the date, start and end odometer readings, total distance travelled, the purpose of the trip, and destination. The more detailed your records, the more useful they will be for your accountant.
  3. Separate Business and Personal Use Clearly differentiate between trips made for business and those for personal use. This is critical for calculating the percentage of vehicle expenses that are tax-deductible.
  4. Leverage Technology Digital mileage tracking apps, like MileIQ or TripLog, can automate record-keeping by using GPS to log your trips. These tools often generate reports that are easy to share with your accountant.
  5. Keep Supporting Documents Maintain receipts for fuel, tolls, and parking fees as supplementary evidence. These can help your accountant cross-verify your mileage claims.
  6. Regularly Reconcile Records Review your logbook periodically to ensure accuracy and consistency. Compare your mileage entries with fuel receipts or calendar appointments to avoid errors.

Conclusion

Keeping a vehicle mileage logbook is not just a best practice—it’s a financial safeguard. It ensures that you’re maximising tax deductions, complying with regulations, and managing your expenses effectively. By diligently recording your trips and providing clear, accurate records, you make life easier for yourself, your bookkeeper, and your accountant. Embrace the habit of maintaining a detailed log, and you’ll reap the benefits of financial clarity and peace of mind.

 

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)