Exploring Different Methods: How to Calculate Business Mileage for Optimal Tax Savings

Figuring out how to calculate business mileage in a way that best suits the pace and environment of your organization is crucial. Not only will it facilitate a more efficient,

August 23, 2023 — 6 min read

Figuring out how to calculate business mileage in a way that best suits the pace and environment of your organization is crucial. Not only will it facilitate a more efficient, compliant reimbursement process for employees using their personal vehicles for their day-to-day job responsibilities, it will also make things much easier when it comes time to file your business taxes. 

But when considering how to calculate business mileage, what’s the best method? In this article, we’ll examine various methods for calculating business mileage, as well as their respective benefits and drawbacks. By comparing these approaches, you will gain the knowledge needed to select the best method for your business and maximize your tax savings.

How to Calculate Business Mileage

Recording Odometer Readings

If you’re thinking about how to calculate business mileage for the mobile employees within your company, the first method that might come to mind is the most analog and possibly the most straightforward: recording the odometer data. This method requires employees to record their odometer readings after work trips, and subtract the difference at the end of each trip to calculate their business mileage. Seems easy, right? In some ways it is, but this method also comes with the potential for error. 

For one thing, a mileage calculation method that relies so heavily on making employees do math on a day-to-day basis creates a higher probability for human error. After all, math is difficult, and it’s all-too-likely that miscalculations could slip through the cracks. 

Calculating mileage solely using odometer readings makes it difficult to know if the reported mileage is actually related to the employee’s work. That opens your business up to the greater possibility of fraud, whether intentional or unintentional. People generally tend to prefer working with nice, round numbers, especially if they’re trying to log their mileage as quickly as possible so they can focus on their other job duties, and employees might round up when making their calculations. 

GPS Tracking

Our second option for employers pondering how to calculate business mileage is the use of GPS tracking. Apps that use this technology track employees’ movements in real time to monitor their activity, help them manage time and travel routes, coordinate with other team members, and verify work-related travel for mileage reimbursement. 

Unlike the method of calculating mileage using odometer readings, GPS tracking brings efficiency and accountability to the forefront. Using GPS technology to monitor mileage helps ensure that workers can create the most direct routes and efficient schedules to help them achieve everything they need to do over the course of their workday. 

Additionally, because the system tracks employee movements in real time, it’s always easy for management and supervisors to verify that employees are exactly where they say they are, and doing exactly what they say they’re doing. Plus, downloading a GPS tracking app to contain and monitor all this information is both easy to do and convenient, making employee mileage and locations accessible at the touch of a button.

However, using GPS to track employee mileage also has its downsides. As with the odometer readings calculation method, because GPS tracking monitors all employee movements, non-work-related mileage might still end up getting counted. There’s also the issue of privacy. While having constant knowledge of your employees’ exact whereabouts is convenient in a lot of ways, the people in your employ might not be too keen on the idea of being constantly tracked as they go about their days, to the point where it could negatively affect morale, and by extension, their job performance. And on a purely legal level, if your organization doesn’t obtain the proper consent to use GPS to track employees, the ramifications could be disastrous.

Using GPS also means that your company may have to learn how to deal with a variety of technical issues. For one, GPS apps can be hacked, tampered with, or tricked by savvy employees. But opportunities for intentional tampering aside, GPS tracking applications can also experience technical issues and errors, or stop working in areas with no cellular coverage or poor wifi connections. While some of these issues are solvable, mitigating them requires diverting company resources toward IT knowledge and support. 

Point-to-Point Calculations

Another way your organization might consider calculating employee mileage is the use of point-to-point calculations. Using this method, employees report the starting point and the final destination of their work-related travel. Then, the system automatically calculates the optimal driving distance between them, and calculates mileage from there. 

This method helps employers avoid headaches in a number of ways. A major one is that point-to-point mileage calculation ensures that only travel related to work is calculated, immediately eliminating non-reimbursable travel like side trips and home commutes. Because point-to-point calculation is a digital, automated solution, the onus is lifted from employees to calculate trip mileage, or supervisors to manually monitor their locations. Instead, travel is automatically logged, making both reimbursement and proving mileage for tax purposes easy and efficient while letting employees focus on doing their jobs to the best of their abilities.

Calculating Business Mileage Doesn’t Need to be Difficult

Luckily for you and your business, CompanyMileage developed SureMileage, our mileage reimbursement solution, so you don’t have to waste time pondering how to calculate business mileage for employees’ business travel. SureMileage eliminates the need for calculation entirely, using the point-to-to-point method outlined above to calculate employee mileage. All employees have to do is simply enter the starting and ending points of each trip, and SureMileage will do the heavy lifting. Our new Quick Capture feature makes this even easier, letting employees press a button on the app to log their location instantly. 

With SureMileage, not only does submitting trips for reimbursement take as little as two minutes each day, but having everything centralized on our easy to use app eliminates both the need for paper logs and the risk of inflated mileage estimates. CompanyMileage is so devoted to efficient mileage calculation and reimbursement that we save our customers 20%-30% on mileage reimbursement expenses, with some saving even more. To learn more, contact us to request a demo today!

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