If you charge your
customers for mileage, keeping track of the billable miles you drive helps you
get all the reimbursements you’re due. But all business-related mileage is tax-deductible, so tracking non-billable
business mileage is important, too. Customers and the IRS alike want records of
the miles you drive, and QuickBooks can help you produce that documentation.
The mileage tracking
feature in QuickBooks tracks only the miles you drive using company vehicles,
not other vehicle expenses, such as fuel or tolls. Likewise, you don’t use
QuickBooks mileage tracking to record miles driven by employees, vendors, or
subcontractors, which instead go straight to an expense account. For example, if
a vendor bills you for mileage, when you enter the bill in QuickBooks , you
assign that charge to an expense account, such as Travel-Mileage. When you
write a check to reimburse an employee for mileage driven, you assign that
reimbursement to the expense account for mileage.
Adding a Vehicle
To track mileage for a
company vehicle, you first have to add the vehicle to the QuickBooks Vehicle
List. Here’s how:
1. To open the Vehicle List window, choose Lists➝Customer & Vendor Profile Lists➝Vehicle List.
The Vehicle List window
opens.
2. To add a new vehicle, press Ctrl+N or click Vehicle➝New.
The New Vehicle dialog box
(Figure 8-6) opens. ╉Tracking Mileage
Figure 8-6:╇ QuickBooks doesn’t want to know much about
company vehicles. All you have to do is give the vehicle a name. You can add
any details you want in the Description box. After you click OK, the vehicle takes
its place in the Vehicle List (shown in the background).
3. In the Vehicle field, type a name for the vehicle. To easily identify your
company cars and trucks, include the type of vehicle and a way to differentiate
it from others. For instance, if your company’s cars are all white Jeeps, use
the license plate number as the name rather than make and color.
4. In the Description box, type additional info such as the year,
make, model, license plate number, or Vehicle Identification Number (VIN). To change this information
later, in the Vehicle List window, double-click the vehicle’s name, and then,
in the Edit Vehicle dialog box, edit the name or description.
5. Click OK.
That’s it. The name and
description appear in the Vehicle List window.
Setting the Mileage Rate
For tax purposes, you can
deduct mileage expenses based on a standard rate or by tracking the actual
costs of operating and maintaining your vehicles. Using a standard mileage rate
is convenient—simply multiply the miles you drove by the rate to calculate your
vehicle deduction.
If you own an expensive car
with expensive maintenance needs, actual costs might provide a larger deduction.
(You can deduct either the standard-rate amount or your actual costs, but not
both.) But to deduct what you spend on gas, tires, repairs, insurance, and so
on, you have to keep track of these expenses. As usual, the tax rules for deducting
operating and maintenance costs are, well, taxing. So before you choose this
approach, ask your accountant or the IRS if you can deduct actual costs and whether
it’s the best approach.
QuickBooks stores multiple
mileage rates along with their effective dates, because standard mileage rates
usually change at the beginning of each calendar year. Here’s how you set a
mileage rate:
1. Choose Company➝Enter Vehicle Mileage.
The Enter Vehicle Mileage
dialog box opens.
2. In the dialog box’s toolbar, click Mileage Rates.
QuickBooks opens the
Mileage Rates window
3. To add a new rate, click the first blank Effective Date cell,
and then choose the date that the new mileage rate becomes effective, such as
1/1/2010.
You can type the date or
click the Calendar icon.
4. In the Rate cell, type the rate in dollars and cents, such as
.50 for 50 cents.
The mileage rate is .50 per
mile beginning January 1, 2010 as documented on the IRS website, www.irs.gov.
5. Click Close when you’re done.
Recording Mileage Driven
Once you’ve added a vehicle
to the Vehicle List, you’re ready to record mileage. (You don’t have to set the
mileage rates to record the miles you drive, but you’ll need that rate in place
before you bill a customer for mileage.) Here’s how you fill in the Enter Vehicle
Mileage window to record billable and non-billable miles you’ve driven:
1. Open the Enter Vehicle Mileage window (choose Company➝Enter Vehicle Mileage). In the Vehicle box,
choose the vehicle that you drove.
If you forgot to add the
vehicle to the list, you can create it now by choosing <Add New> from the drop-down
menu. Tracking Mileage
2. In the Trip Start Date and Trip End Date boxes, choose when you
started and completed the trip, respectively. If you’re recording mileage
for one day of onsite work, choose the same day in both boxes. On the other
hand, if you used a company car to drive to another city for several days, the
Trip Start Date is the day you headed out of town and the Trip End Date is the
day you returned.
3. In the Odometer Start box and Odometer End boxes, type what the
vehicle’s mileage was before you began driving and what it was when you
returned, respectively as shown in Figure 8-8. QuickBooks automatically
calculates the miles you drove and plops that number in the Total Miles box.
You can also fill in the Total Miles box with the miles you drove.
Figure 8-8:╇ If you usually forget to check the starting
mileage, you can ignore the Odometer Start and Odometer End boxes entirely.
Instead, in the Total Miles box, type the mileage you drove, such as 72 for a
72- mile round-trip to your customer. You can type the mileage with or without
commas (1,500 or 1500). The drawback to this approach is that your mileage
record doesn’t include the odometer readings that the IRS wants to see. But if
every mile you drive is for business, you can prove your deduction by showing
the IRS an odometer reading at the beginning of the year and one at the end of
the year.
4. If your mileage is
billable to a customer or job, turn on the Billable checkbox. Then, in the
Customer:Job box, choose the customer or job to whom you want to assign the
mileage. If the mileage isn’t billable to a customer, choose the faux
customer you created to track time spent on administrative activities.
5. In the Item drop-down list, choose the item you created for
mileage. For tips on creating an item for mileage.
6. If you track classes, in the Class box, choose the appropriate
one. For example, if you use
classes to track branch performance, choose the class for the branch. However,
if you track partner income with classes and the mileage is non-billable, you
don’t need a class assignment.
â
7. To further document the reason for the
mileage, type details in the Notes box. Then, to save the mileage and close the
dialog box, click Save & Close. If you want to enter additional mileage for other customers and
jobs, click Save & New. FREQUENTLY ASKED QUESTION 
Figure 8-9:╇ When you create an item for mileage, you
can enter whatever rate per mile you want. When you add the mileage to an
invoice, QuickBooks multiplies the number of billable miles driven by the rate
you set in the mileage item.
Generating Mileage
Reports Mileage records come in
handy when you prepare your taxes or if your customers question their mileage
charges. These reports are simple, mainly because you don’t track that much
mileage information in QuickBooks. You can generate mileage reports by choosing
Reports➝“Jobs, Time & Mileage”
and then selecting a report. Or, if you have the Enter Vehicle Mileage window
open, in the window’s toolbar, click the down arrow to the right of the Mileage
Reports command.
Reports
Here are the reports you
can choose and what they’re useful for:
• Mileage by Vehicle Summary.
For your tax backup, this report shows the total miles you drove each vehicle
and the corresponding mileage expense (which QuickBooks calculates using the
standard mileage rate in effect at the time). The date range is set initially
to This Tax Year, which is perfect for generating the data you need for your
tax return. If you wait until after January 1st to gather your tax
documentation, in the Dates box, choose Last Tax Year.
• Mileage by Vehicle Detail. This report shows each
trip that contributed to a vehicle’s mileage. For each trip, the report
includes the trip’s end date, trip miles, mileage rate, and mileage expense. If
you have questions about your deductions, double-click an entry to open the
Enter Vehicle Mileage window for that transaction.
• Mileage by Job Summary. If you charge customers
for mileage, run this report both for total miles driven and the billable
mileage by customer and job.
• Mileage by Job Detail. If a customer has a
question about mileage you charged, this report is the quickest way to find the
charges in question. The report groups mileage by customer or job, but lists
each trip in its own line. The report shows each trip’s start date, end date,
miles driven, billing status, mileage rate, and billable amount, so you can
answer almost any mileage-related question a customer might have.
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