What Is Mileage Tracking and Why Do You Need It?
As every freelancer knows, running your own business sometimes comes with out-of-pocket expenses. It’s important to invest in your business and do whatever it takes to be successful, but many people do not realize all of the ways that they can get money back through their taxes. If you’re using your car in any capacity for your business, those are miles you can log when you do your taxes and get reimbursed for.
You can either use the actual expense method or standard mileage rates. The actual expense method is more difficult and time-consuming because it involves tracking every detail of using your car for work. This includes insurance, repairs, oil changes, tires and any other cost associated with driving. Most business owners opt for standard mileage rates, which is tracking how many miles you have driven and then multiplying that by the cost already calculated by the IRS. Even this can be time-consuming though, so it’s best to use a mileage tracker app to accurately and easily track the miles you travel for work.
So why should you consider using an app to get those accurate miles for your tax returns? Here are a few compelling reasons.
1. Saving Money Is Always the Best Perk
As a freelancer, you probably have a budget that you like to stick to in order to ensure everything runs as smoothly as possible. If you have an app for mileage tracking that will save you a significant amount of money when it comes to your taxes, then it’s absolutely a necessity. Being a freelancer is not an easy job, and there are inevitable highs and lows when it comes to finances. The IRS allows for 57.5 cents per mile driven for business use. If you drive a fair amount for work, this can really add up.
2. Times are Changing
We live in a fast-paced world where the work environment is changing every day. You may suddenly find yourself traveling more for your job as demand for your product increases or you need to attend physical client meetings. If your travel increases, it’s essential to receive compensation for it rather than shouldering the expense yourself. Making a habit out of tracking your mileage will allow for more flexibility should your traveling increase or decrease. As a result, you’ll be more aware of how much you can save each year by claiming the miles.
3. Using an App Cuts Down on the Work You Have to Do
It would be one thing if tracking your mileage took a lot of time to do, but an app can take care of it automatically. As a freelancer, your time is precious and you do not want to waste it on manually calculating your miles. It’s important your mileage records are accurate, however, because inaccurate reporting can cause more trouble than it’s worth—like tax audits. With an app, you’re not only saving time. You’ll also save money and increase your peace of mind because you can be confident that you reported accurate mileage.
Adding another thing to your to-do list as a freelancer can seem intimidating because you already have so much to take care of on your own. But tracking your mileage is certainly worth it. If you haven’t reported your mileage before but feel it would be beneficial based on your travel times, start tracking it right away. It will save you time, money and therefore stress in the long run!