Keeping a CRA Mileage Log: What to Know
The Canada Revenue Agency (CRA) recommends that businesses keep an accurate business travel log during their financial year. A log is the best documentary support for any motor vehicle expense claims. In keeping a mileage log, record every instance you use the vehicle for business purposes and state the purpose of the trip. Input as well the starting point and mileage, destination, ending mileage, and total kilometres driven. You can use several types of mileage trackers; here are four options.
People involved in small business accounting are no strangers to QuickBooks. Not everyone knows, though, that this app has a built-in automatic mileage tracker. The entire app does not take up much of your data and battery life; every hour, it uses only approximately 2.73 MB of data and 0.04% of the phone’s battery.
You can set the app to track your mileage automatically and categorize trips as personal or business ones. You can also make your tracking more accurate in the app’s settings, but note that doing this takes more out of your battery. You can also use QuickBooks Self-Employed to compare your actual expenses with your business miles and recommend appropriate deductions.
A caveat to the QuickBooks Online mileage tracker is that only the Primary Admin of the QBO file can use the mileage tracker. That’s obviously not a great option for someone who has multiple employees that need to track mileage. The next few apps will help remove this caveat.
MileIQ is a free GPS-backed mileage tracking app that automatically logs and tracks miles using drive-detection technology. This feature helps you calculate the cost of each drive for reimbursements or tax purposes.
With MileIQ, you get automated tracking, so you do not need to log your miles manually. It records trips to the fraction of a mile without consuming more of your battery, which means more accurate logs for a longer time. MileIQ also lets you export mileage tracking data and create detailed reports and spreadsheets.
For a free app, that is a considerable amount of features. To get a complete record of your drives, though, you can upgrade to MileIQ Premium at $6 per month or $60 per year. If you are a paid Microsoft Business user, you are provided a free version of MileIQ because Microsoft acquired MileIQ back in 2015.
One caveat to using the free version of MileIQ if you aren’t a paid Microsoft Business user is that you are limited to 40 trips per month, including your personal trips. So if you drive every day, then you’ll want to upgrade to the paid version.
Hurdlr tracks business expenses and mileage. Freelancers, contractors, and other self-employed people are the primary users of Hurdlr. It allows them to create receipts and expense reports for different clients, and it connects with Uber, Square, PayPal, FreshBooks, and Stripe, enabling easy tax calculations.
Hurdlr comes in free and paid versions, with plans that cost either $5 or $10 per month, billed annually. In the free version, you can track your taxes and expenses apart from your vehicle’s mileage. The paid versions give you access to better automation features with detailed tax trackers. Also, Hurdlr’s IRS mileage tracking allows 1099 filers to claim maximum deductions, and it provides real-time quarterly and year-end tax estimates, which is perfect for independent contractors.
Old Fashioned Paper and Pen
Before Bluetooth, GPS, and other similar tools were created, contractors recorded their odometer readings at each trip’s start and end using a good old fashioned notebook and pen. This practice is acceptable to the CRA, but you need to document each trip carefully since rough estimates might cause issues during audits.
People who want to use this method can purchase a trip diary for their vehicle or record the information in an Excel spreadsheet or notebook. If you choose a notebook, make sure to leave this in your car where it’s visible so you’ll remember to add the trips to your mileage log. Note, though, that this method involves a little more conscious planning. If you forget to reset the odometer, for example, you might find things confusing when it is time to record your miles.
Maintaining a healthy cash flow for your business involves knowing how to track and record your expenses. If you are a contractor or use a vehicle in your operations, you will need an accurate way of keeping a log of your trips, especially if you’re counting these as business expenses. Various apps can help you do this today, but the old-school methods will work perfectly well, as long as you are extremely organized with your record-keeping!
Stay on top of your bookkeeping when you partner with Blueprint Accounting, Inc. We offer a wide range of small business accounting and virtual CFO services across Canada. Get in touch with us today!