Business Tips: Three Common Expense Tracking Mistakes

Mileage Log: A common misconception is that you have to write down your beginning and ending odometer every time you get in and out of your car for business. An ending odometer at the end of December, which becomes the beginning odometer for the start of the new tax year, is all you need to know to have the total number of miles driven during the year. Your business mileage log only needs three things for each entry: 1) Date 2) Miles driven and 3) Description of the business purpose.

Saving Receipts: The official rule is that a receipt is not needed unless the expense is over $75 or for lodging, but there's a caveat. Detailed receipts are required regardless of the dollar value in two additional circumstances: 1) when you pay for deductible items with cash and 2) When the expense is not obvious. For example, if you purchase office supplies at a drug store, a detailed receipt would be needed to substantiate which items purchased were not personal. On the other hand, a receipt for a credit card purchase to "Discount Business Cards" for $36 would not be necessary.

Record Business purpose: The most important element is to document the business purpose. It can be as simple as writing the name of the person you treated to lunch and the business purpose on the receipt to substantiate a meal deduction; or a note in your calendar to document the points of a meeting for which you claimed deductible business miles. Deductible business expenses must have a legitimate business purpose and must be documented.

Whatever system you choose, make your life easier at tax-time by documenting your business deductions as you go instead of scrambling after the year is over. For more information about Deductr's expense, mileage and time tracking system visit deductr.com/nar.