Your Guide to Tracking Mileage for Work

Tracking mileage for work reimbursements sounds straightforward enough, right? An employee drives their personal vehicle as part of their work-related duties, they write it down, and they get reimbursed. In practice, though, things aren’t always that simple.

Maybe logs get filled in from memory days after the fact. Employees accidentally (or on purpose) include ineligible mileage in their expense reports. Records go missing, math gets haphazardly done, and submissions start to pile up at the end of the month in a way that would give an IRS auditor a headache. The gap between “we have a mileage log” and “we have a mileage log that would actually hold up to scrutiny” is wider than a lot of businesses realize. 

When it comes to tracking mileage for work, the IRS does give organizations flexibility in how they do it. Paper logs, mileage spreadsheets, mobile apps – all are allowable in the eyes of the IRS. What they do not bend on is whether mileage records are accurate, complete, and done in a timely manner. 

To help keep you on the right track, CompanyMileage has created this handy guide to tracking mileage for work. We’ll discuss everything a compliant mileage log must include, where manual tracking methods tend to break down, and how automated tools and solid policy can help. 

What the IRS Requires from a Mileage Log

First things first: the Internal Revenue Service and their requirements. According to the IRS, mileage is reimbursable when employees travel from one place to another as part of their business or profession, to visit clients or customers, to attend meetings for business purposes, or from their home to a temporary workplace when they have one or more regular workspaces. Anything else, including commuting, side trips, and errands, is not considered eligible travel for reimbursement. 

The IRS accountable plan, which renders reimbursement payments accountable (ie: non-taxable), requires that:

• The submitted mileage must be business-related
• There must be proof in the form of a mileage log
• If an employee is paid an amount that exceeds what was incurred or spent, the employee must return it. 

Additionally, Mileage reimbursement logs must be up-to-date and include the trip’s date, destination, mileage and business purpose. 

How Manual Tracking Methods Work, and Where They Fall Flat

There are many ways of tracking mileage for work, but not all of them are as equally effective, making choosing the right method difficult. Manual methods are, in theory, IRS-compliant, and many businesses do use them successfully. However, they also have structural weaknesses that get more and more expensive as your workforce grows, or as your mobile employees log more trips. 

Paper Logs

Standard paper mileage logs are the most traditional method employees use for tracking mileage for work. Paper logs are also easy to use. There’s no technology required, no learning curve, no connectivity issues. Just paper and a pen.

But…

If you want the most accurate record possible, paper logs aren’t going to cut it. Paper logs are extremely easy to lose, forget, or damage. With a paper logging system, there’s also always the risk that an employee will just wait and fill it out at the end of the week instead of doing so contemporaneously (which undermines the IRS rule about timely recordkeeping). Plus there’s no mechanism for flagging errors or missing entries before a report gets submitted.

Some people still prefer the old-fashioned approach because they feel it gives them greater control over their information. If you want to use paper logs, make sure that you create a backup system in case it is damaged, lost, or destroyed.

Spreadsheets

Because of their ease of use and customizability, mileage spreadsheets are another popular tool for tracking mileage for work. Programs like Excel or Sheets can be great for monitoring mileage digitally. They let workers keep track of all the details of each trip you take for work without the worry of losing notes or forgetting anything important. 

But…

Spreadsheets aren’t without their faults. One downside of tracking mileage for work with a spreadsheet is that it can be time-consuming to enter all data manually. This is especially true if you have a lot of trips or if you take multiple modes of transportation. It is also extremely easy to make mistakes when entering data into a spreadsheet, leading to inaccurate records. 

Another downside is that you may not have access to your spreadsheet when you’re on the go, making it challenging to track mileage in real time. This often means that entries will get batched and entered later from memory which, again, conflicts with the IRS’ timeliness requirement. 

Odometer Readings 

This method of tracking mileage for work requires that the employee record their odometer reading at the start and end of each trip, then subtract to find the mileage driven. This is, technically, a totally IRS-compliant method.

But…

There’s a pretty big practical problem. This method requires workers to physically check and record per numbers per trip, and then do math. There are so many opportunities in this particular method for transposed numbers, miscalculations, and other errors or omissions to slip through undetected. 

The Common Thread 

When you use manual processes for tracking mileage for work, the integrity of the entire system depends on every single individual employee being diligent, consistent, and honest, every single time. Managers reviewing manual logs have limited ability to verify the data, and there’s no real way to differentiate between eligible mileage and ineligible mileage (like commutes and personal trips). When errors do get spotted, managers and admin teams have to spend their (valuable!) time chasing down incomplete submissions, correcting errors, and reprocessing paperwork. 

How Digital and Automated Tracking Solves These Problems

As the global workforce expands and technology advances, digital tools and solutions for mileage tracking are proving to be a game-changer for businesses used to manual methods. These methods have certainly been serviceable in the past, but it’s time to leave them there, and let your business advance with the technology and the world around it.

By using trustworthy digital tools, such as mileage software, to automate the mileage tracking process, you free up your employees, managers, and supervisors to spend their time at work actually doing their jobs, instead of fishing around for lost submission forms. If you do, you might see the following benefits:

Accuracy Through Automation

The first and most immediate benefit of automating mileage tracking for work is that in doing so, you immediately eliminate the possibility for errors that come from manual data entry, and by extension, reduce the possibility of inaccurate mileage reimbursement claims. By digitizing tracking, automated solutions also greatly enhance accuracy. 

Mileage reimbursement software uses some elements of GPS tracking (as far as GPS solutions go, see our note below) to capture exact locations and provide specific and accurate trip mileage data. Automated mileage reporting also generates data on real-time employee travel and mileage usage, giving businesses greater oversight into how employees structure their days and spend their time.

Contemporaneous Recordkeeping By Design

Digital tools handle the IRS’ timeliness requirement in a way that manual methods structurally cannot. Using mileage software, employees can log trips from their phone during or immediately after travel. Records get captured in real time instead of reconstructed by memory at the end of the week. This matters enormously in the event of an audit; One of the first things the iRS will look for is whether records appear to have been created after the fact. 

Audit Readiness and Centralized Records

Audit readiness extends beyond just timeliness. Digital logs are stored centrally, date-stamped, and easily retrievable. If your business ever faces IRS scrutiny, mileage software makes producing clean and complete records a straightforward task. That kind of documented, traceable approval trail is something manual recordkeeping cannot produce.

Administrative Efficiency and Workflow Automation 

Automated mileage tracking safeguards faster, more streamlined mileage reimbursement processes for your organization. Mileage tracking solutions come with automated approval workflows, customized to meet the needs and organizational structure of individual businesses. This ensures that administrators, supervisors, and management can review and approve reports and immediately move on with their workdays, without having to worry about lost or missing paperwork or approval bottlenecks. 

Many software solutions also help businesses keep reporting compliant, with the ability to observe and flag problematic behaviors in the system, such as when claims exceed a per diem amount, or when duplicate reports are submitted.

A Note on GPS-Only Tracking:

Not all digital solutions for tracking mileage for work deliver all the advantages we’ve listed above. Raw GPS tracking alone can be unintuitive, as most GPS systems track all mileage, not just the mileage that’s actually eligible for reimbursement. GPS tracking also doesn’t always produce structured IRS-ready records on its own. A map is not a mileage log. The most effective solution is a complete system, one that combines location-based data with structured reporting and customizable workflows. 

Building a Mileage Policy That Makes the System Work

The best, most efficient mileage tracking technology in the world can only be as effective as the policy surrounding it. A good mileage policy sets expectations, then gives employees the information and guidance needed to meet those expectations. Your business’s mileage policy should:

• Define exactly what qualifies as reimbursable mileage. State clearly what counts as business mileage and what does not (Client visits, site inspections, and travel between work locations are in. Commuting from home to a primary office is very explicitly out). Specificity protects your organization from compliance errors and removes ambiguity for employees.
• Set and explain the reimbursement rate. Businesses can use the IRS standard mileage rate or use their own, but whichever rate your company uses needs to be documented and communicated to its employees.
• Establish submission deadlines and approval workflows. Explain how often employees need to submit mileage reports and what that approval chain looks like.
• Build in a regular review process. A mileage policy that gets written once and then filed away is a liability. Mileage rates change, fuel costs fluctuate, and workforces evolve. Regular policy reviews keep everybody compliant and signal to employees that fair and compliant reimbursement is a priority, not an afterthought. 

CompanyMileage Makes Tracking Mileage for Work Easy

If you’re looking for the best way to track mileage for work, then you’re in the right place. CompanyMileage’s suite of software solutions for mileage reimbursement are specially designed for accurate, organized, and intuitive mileage tracking. 

SureMileage, our mileage reimbursement software, uses a unique method called point-to-point calculation to calculate mileage for reimbursement. This method takes the starting and ending points of each work-related trip and from there calculates the best route between them, and the expenses to be reimbursed, eliminating the tedium of traditional mileage calculations. 

Our SureMobile app makes gathering data easy, letting employees log their trips quickly and easily on their smartphones. At the end of each workday, they simply have to take a few minutes to organize their trips, photograph any relevant receipts, and submit expense reports, which then move through a customizable workflow. Our system also integrates with all major accounting and payroll software, ensuring that every step of the process is as streamlined as possible. 

Accurate, accessible vehicle mileage logs are a crucial part of any successful and compliant reimbursement process, but with the right tools you can enhance your organization’s mileage management without added stress. Find out how CompanyMileage can help save you time and money by contacting us for a demo today!