July 17, 2020
With the many day-to-day demands of running your business, it can be challenging to keep detailed records of your company vehicles. But according to Vincent Servello, a certified public accountant (CPA) who works with small businesses, diligent tracking can really pay off.
Putting in the effort to improve your vehicle expense management can help save you thousands of dollars, says Servello. It also permits business owners to save on taxes, set fuel-efficiency goals, or target specific vehicles for replacement.
Read on for five tips for business owners looking to better manage vehicle-related expenses.
While it may seem convenient to use one credit card, one calendar, or one email address, Servello says it’s much easier to track expenses with work-specific finances and accounts.
“Try to avoid paying for any work expense with your personal credit card, and book all meetings or appointments on your work calendar,” he instructs. “Having a record of client engagements in one place makes tracking down travel or car expenses much easier.”
Keeping personal and business mileage separate will also keep your finances better organized. Consider keeping the personal driving done on work vehicles to a minimum; it will be easier to sort out mileage-expense deductions on income taxes, and it will reduce wear on work vehicles.
Saving documentation from vehicle expenses takes the guesswork out determining your total vehicle expenses, advises Servello — and reducing guesswork will make things like monitoring and paying for expenses and doing your income taxes a lot simpler. It also helps identify when a vehicle becomes more expensive to maintain than to replace.
Doing this the old-fashioned way can be a daunting task. “I’ve seen fleets accrue very large numbers of small paper receipts from fueling, paying tolls with cash, or undergoing repairs,” says Servello. You could always consider putting an accordion folder in each vehicle for storing receipts, but then you’ll need to collect them on a regular basis, sort them, and hold them for your accountant. Then there’s reimbursing employees and reconciling expenses with bills and payments. If they get lost, that’s time and money down the drain.
Speaking of loss, are you still paying for fuel with cash or traditional credit cards? Fuel cards and electronic RFID tags can help consolidate expenses and take some of the organizational paperwork out of managing a fleet. The right fleet fuel card can remove the need to save a receipt entirely, which may be the simplest option for many businesses with vehicles. You’ll eliminate time-consuming employee expense report processing and substantially reduce the risk of unauthorized spending and fraud. Plus, most business gas card programs come with detailed reporting and controls that let you turn off or on fuel card access on the spot.
Improved monitoring of your fleet’s expenses will help paint a more accurate picture of your overall business expenses, as well as save you money.
Business owners should consider tracking mileage and expenses by vehicle. There are several reasons for this important practice:
Here again, a good fleet fuel card plan can be a valuable resource. Get a separate card for each car or driver. Cards issued by the Fuelman® network often include not only fuel usage reports, but maintenance tracking as well, making comprehensive car-by-car expense tracking quick and easy.
Whether your business fields just a handful of vehicles for a sales team, or you run a delivery-based business with dozens of vehicles in constant use, you’ll qualify for some kind of discount or rebate on gasoline and diesel with a fuel card. In some cases, the savings comes in the form of a cents-per-gallon discount when you fuel up at locations within a proprietary network. Other plans are volume-based and pay back in the form of rebates tiered to reward heavy users.
Today’s automated invoicing and payment technology is not just for huge corporations any more. Even a small business can benefit from plans designed to track and pay for not only fuel, but other business and employee expenses as well. You’ll save time and money by lowering risk, automating payments so you never miss a due date, and benefiting from accurate and timely spending reports that make tax reporting and profit-and-loss statements a breeze.
At the end of the day, proper documentation of fleet expenses and mileage won’t only save you money on your vehicles, it will also make your taxes less cumbersome and potentially less costly to do. And, Servello adds, it will give you a trove of high-quality data that can be used to smooth out business operations. It doesn’t have to be annoying or difficult to do, either, when you let digital solutions like fleet card plans take out a lot of the grunt work so you can focus on running your business.
Does your fleet card program offer detailed reporting that helps you measure performance and prepare for tax reporting? If not, speak with a fleet specialist today and get the benefits you need to stay on top of your game!
Vincent Servello is a CPA headquartered in Westborough, MA. https://www.servellocpa.com/