It’s the plight of nearly everyone who uses their car for business: What to do tax accounting time. Toronto is full of people who commute from out of the city and rack up a lot of KMs along the way. Many wonder if they can use a flat rate for business mileage, or if they have to keep all their receipts and add it all up.
This is also an important question for small business owners. Perhaps you use your vehicle to deliver goods. Or maybe you drive from client to client to deliver a service.
The answer is that you need to keep a mileage logbook if you use your car for business—whether you’re a small business owner or a commuter. There is a new simplified method for self-employed people, but you still need to keep a logbook for the tax year before you can use it. If you try to claim business mileage without a log book, your claim may be reduced or disallowed.
So keep really good records. Your glove box or cup holder may become a home for faded gas receipts, but it’s all worth it. Self-employed people in Toronto are more likely to be audited, versus employees.
It’s important to keep your receipts and other documentation to support your business accounting. Think of them as money, because they really are. These will help you get money back come tax season.
Fortunately, it’s never been easier to track your mileage using technology. Microsoft provides free templates to track your KM and traveling in a nice, clean spreadsheet template. This means you can also easily track your mileage using your iPhone, Blackberry, Android or tablet.
If you have any questions about what you can or can’t write off at tax time, feel free to contact one our staff members.