Manual Mileage Tracking - When Will Your Small Business Get Audited

April 18, 2020

A driver pulls a notebook from the glove box, grabs a pen, and jots down the odometer reading. This is an almost daily occurrence for drivers working for small- and medium-sized businesses (SMBs), even in the age of smartphones and mileage-tracking apps.

Mileage tracking can be complicated and prone to errors. As a business owner or manager, letting drivers manually track miles while thinking that you’ll never be faced with an IRS or state tax audit is a mistake that could cost your business big money and loads of time.

Three reasons to automate mileage tracking

Automating mileage tracking can simplify record-keeping and save your business both time and money. Here are the top three reasons why you should make the switch.

1. Manual logging relies heavily on drivers –The driver must remember to enter the mileage and other data at the right time for each trip and stop. Busy drivers may forget or skip this important task, and then go back later to try and recreate the log from memory. This can create problems because the IRS requires “timely kept records” created at or near the time of the expense.
2. Manually tracked mileage records can get lost or destroyed – What happens if a driver spills a cup of coffee all over a mileage log, or loses it during a stop? You’ve just lost evidence that could be worth thousands of dollars on your taxes. In a best-case scenario, you’ll have to spend time trying to recreate the mileage log. In a worst-case scenario, missing the proper evidence could lead the IRS to disallow all or part of a deduction claim.
3. Manual mileage logging offers opportunities for fraud –Employee expense fraud costs U.S. businesses $2.8 billion per year. This expense fraud includes mileage fraud, such as logging a personal errand as a work trip. Manual mileage tracking can make it easier for a driver to fudge records and make personal trips on the company time — and dime.

Automated mileage tracking to the rescue

Many of the problems caused by manual tracking can easily be resolved through automation. Here are a few things automated mileage tracking can do for your business:

1. Accurately identify fuel costs – Automated mileage tracking makes it easier to track fuel costs more precisely, which is key to managing the cost of a fleet.
2. Manage fuel costs – Using automated mileage tracking reports can help you spot problem areas, reduce fraud caused by personal purchases at the pump, and address less-than-optimal fuel economy caused by driving or maintenance issues.
3. Increase driver efficiency – Providing automated mileage tracking frees the attention of drivers so they can focus on driving, ensuring safety on the road and increasing the time they have to serve customers.

Whether you use a mileage tracking app or some other type of program, automated mileage tracking is essential for your peace of mind.

When it comes to automatic mileage tracking, a fleet card can be your best friend. Check our our full line of cards and find one that's right for your business.