Owning your own business is an exciting undertaking that can be both stressful and rewarding. It is said that proper record keeping can keep the internal system of any business running smoothly, creating less stress at the end of the fiscal year. Good record keeping not only keeps one’s business organized, it helps when complying with the law and it can keep any business informed about their financial position at any time.
A mileage logbook is considered the best evidence to support the use of a vehicle for both personal and business, as well as use by employees. When it comes to an employee driving a business vehicle, ensure that your employees are trained in keeping track with a mileage logbook. If you use more than one business vehicle, keep a separate record logbook for showing the totals and business kilometers.
How does one create a vehicle mileage logbook? There are a few options available, depending on the business’ needs. According to the CRA, smaller businesses, or one that is only starting its first year, a Full Logbook would be the best fit and it is the most recommended. At the beginning of the fiscal year, record the odometer reading for each vehicle that will be used in the business. In the logbook, record the following:
· The date of the trip
· The destination, coming from and going
· The purpose of the trip (be honest!)
· The number of kilometers/mileages of the trip
The CRA has given one more option when it comes to motor vehicle records, known as a Simplified Logbook, which can only be used under certain conditions. The main objective for this logbook is that the business must have kept a comprehensive Full Logbook over a typical 12-month period (this is known as the “base year”) which serves as a reference period for the subsequent years. Also, the use of a business vehicle must be within 10% of the results of the business use, and this will be calculated by multiplying the business use as determined in the base year by the ratio of the sample period and base year period. The formula for this calculation is as follows:
(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use
There are many options for choosing your vehicle record logbook. Online shops such as Amazon and Staples have physical logbooks for your vehicle glove box. Other options can include downloading and printing off PDF templates, and the last option can include smartphone applications. Apps for ISO and Android users can include MileIQ, TripLog and Mileage Trip Log (this not available for Android).
Whether you use a physical book or a smartphone application, keeping clear records of your business mileage will result in a more comfortable business experience and will help deduct expenses from your vehicle. Remember to be reasonable with what you record and keep receipts from your travels as this will support your logbook as well! Safe travels!
Click HERE for a free Mileage Logbook PDF!