How to record mileage
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How to record mileage
Using your private vehicle for business purposes is a legitimate business expense, and most small business owners choose to take advantage of this by claiming a deduction for business miles driven ...
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Really helpful - I'd just like to know (using option 2) whether there is any way that I can make this show as a paid bill as currently sitting on my dashboard is all of these unpaid bills? Hope that makes sense!
Hi @KeyboardSmash, we're happy to help but will need some more information. Are you tracking mileage for your employees, a client, or for yourself? This would then determine whether you would invoice or reimburse.
@Laura_Kavanagh thanks for your response. I am tracking for myself
Hey @KeyboardSmash, one of our existing Wave customers brought up this great option. You mentioned that you already have unpaid bills open, so you may be able to skip the next few steps, but just in case this is how we'd recommend setting it up.
Select Purchases > Bills. Select Create a bill.
On your bill, select Vendor then add a new vendor named Myself or your company name.
Select the product box and Add new product. Call this new product Mileage expense tracking 2019. Set the expense account to Travel Expense and just leave the price as 0.00 (since this will be different for each bill). > On the bill, your quantity = # of units traveled (miles) and the price = the total price divided by the # of units. > In this example, remember you had an expense of $55.50 and 100 miles. This means the quantity = 100 and the price = 0.5555.
Save the bill! Your last step is to Add a payment and this will update your accounting to show the expense. You'll also be able to pull up reports on your travel expense costs for claiming purposes, or to pass along to a client should this become a reimbursable expense for you.
Hiya
@Samd Yes so I have already created all the bills, just as you have outlined there. What I am asking is the 'add a payment part'. Can you go into any more detail about that? Because there won't be an actual payment out of my account to match it up to. So is it just a fictional payment? From the options in the 'Record a manual payment' screen what options should I select - this is what I am thinking:
Payment method: bank payment
Payment account: My bank account that is linked to Wave
I hope this makes sense.
Thanks
Sarah
Hey @KeyboardSmash, I use the method that @Samd talks through; I found your post because I have the same question as yourself.
I pay for my fuel with my personal account but I don't link that to Wave and nor does this mileage amount come out of that bank as a transaction, so I'm selecting 'other' as my payment method and 'owner investment' as the payment account, because in effect this is money I personally have put into the business. I'm not an expert and not sure if this is right but it makes sense in my head.
Hope that may help
Natty
@Samd @natty thanks for posting that - my only concern with putting the payment account as 'owner investment' is that it will not appear as an expense. But I am concerned that if I put my bank account that won't match my linked bank account when I come to reconciliation. Our situation is the same, I pay for mileage out of my personal account which is not linked to Wave nor do I want it to be. I am just keen that the mileage cost is recorded against my expenses so that I have an accurate report of my expenses.
@KeyboardSmash As @natty stated, it would be best if you chose 'other' as the payment method, and selected a completely different payment account for this transaction so that it appears an expense in your reports, but is not actually reflect in your bank account for reconciliation.
@Samd A bit more complexity here -
I am using my personal vehicle for corporate activities; usage is over 90% for business purposes;
I am expensing all fuel and maintenance to the business for now. I bill kms to specific clients but not to others as I operate in two different industries. Should i create two separate Mileage accounts; one for kms invoiced to clients and the other for tracking non-billed kms used for business? Would doing it both ways and claiming the non-billed mileage as an expense claim cause confusion and possible audit or should it be ok as long as records reflect accurately? Is there a simpler way to do this and reimburse myself for the companies use of my vehicle without creating excess taxable revenues on the personal side? (I'm guessing setting up a rental or leasing contract with my company would be counterproductive in that regard)
thanks for your input,
Faron
Thanks for the article. I claim actual vehicle costs in my tax return, but have to reduce the claim by the percentage of my private mileage, I also have to reduce the vegicle depreciation by this amount.
Example: Private mileage 5% of total mileage. Vehicle fuel and maintenance = £5,000. Vehicle value currently £20,000 depreciating by 10%.
I have followed the tutorial to create a depreciation account and have created a journal entry for gross depreciation of 10% but that should be £2,000 less £100 which i would like to show in tge accounts.
Are you able to explain how to do all this please?
@FaronF the audit/liability side of this question might be better suited for your accountant who understands the restrictions in your location, but I'd say that your gut instinct is correct: you're better off creating two separate mileage accounts, one for the mileage you claim as a reimbursable expense to clients, and one for the regular business expense you claim on your taxes at the end of the year. This will help keep you organized so you can avoid claiming the same mileage twice.
@VFear can you clarify your processes for us a little bit? It sounds like you're incorporating private mileage into your depreciation transactions - where does the additional £100 come from for your depreciation transaction? Apologies if I've misunderstood. It's also possible that this is a requirement of your local tax authority, in which case your accountant would be better positioned to assist.
@Sophia I have to reduce the depreciation value by the amount of my private mileage before claiming tax relief, but then year on year the vehicle depreciates at full rate.
I just need to understand how to show the transaction in Wave.
Thank you for this. To clarify your note regarding client reimbursement for mileage, are you suggesting wave users classify the mileage as a "product" as opposed to a "reimbursed expense" per the instructions in this article? https://support.waveapps.com/hc/en-us/articles/115000588103-Claim-reimbursable-expenses-on-an-invoice
I was going to enter a journal transaction for the reimbursable amount on my books, and then classify it as "refund for job income" but it sounds like I should not do that.
@JamieD - I have set up my mileage tracking bills but when I go to pay them I am not sure what Payment Account to select? My only two options are Owner/Investment/Drawing and Cash on Hand. Do I need to set up a specific payment account for Mileage? I dont want to mess anything up so asking before I do.
@VFear We still may need a little more context here -- from my understanding, it's that you have a vehicle as a fixed asset and only need to reduce the depreciation value of mileage if you use the vehicle for private use. To me, it sounds likely that you will need to seek advice from an accountant in this particular situation.
@Carrie_W If you take a look at the help centre article above ^^ it states; “Remember that, since you are essentially “selling” this mileage to your client as part of your rendered services to them, you cannot claim this mileage again as an expense deduction on your taxes. Passing the cost on to your client makes your mileage a product you’re selling, rather than a reimbursable expense! ”
@MrsHungryAsian Since (from what it sounds like) this is a personal vehicle, you will want to make sure that you select the payment account of Owner Investment/Drawings.
{We still may need a little more context here -- from my understanding, it's that you have a vehicle as a fixed asset and only need to reduce the depreciation value of mileage if you use the vehicle for private use. To me, it sounds likely that you will need to seek advice from an accountant in this particular situation.}
I need to depreciate the vehicle by the percentage determined by the government as a tax deduction, but i then have to account for personal mileage in the vehicle and reduce the deduction by the amount of personal mileage. I understand the calculation but don't understand how to show it in Wave because this is my first year end.
@VFear It sounds like this might be a little bit easier than we both thought. Firstly, the personal part would not count toward the business so this part of the mileage can be factored out (it doesn't need to be tracked, but I understand it needs to be deducted from the mileage you used for the business).
You will need to figure out this calculate manually (the deduction of personal mileage from the actual expense that you are creating -- the government depreciation). Once that is complete, you will simply just need to follow the steps listed in this help centre article; https://support.waveapps.com/hc/en-us/articles/208623506-How-do-I-handle-depreciation-and-amortization-
If this still doesn't help, please let me know.
I have followed those steps in that linked article. You may see i have commented on that too. Hopefully my account will find a way of recording it, or i'll be able to put something in my mileage app.
Once I've entered the mileage in Wave as a "bill" should I mark it as a paid invoice or not? What are the implications of doing so (or not doing so)?
Obviously its not a real bill, so I'm not sure what if anything to do once I enter it. Is the entry really just for recording/placeholder purposes?
Thanks!
I found the following article:
https://support.waveapps.com/hc/en-us/articles/360000099163-Entering-mileage-in-Wave
However, what I do not understand is why I credit the Owner's Equity account for the same amount as the mileage. Can somebody explain this? If I use the method in which I create a vendor called "Business Mileage," as explained in the article, do I still need to credit Owner's Equity?
wynnel,
Haven't looked at the link but the reason would be that it is something paid for or incurred outside the business for the benefit of the business. So an owner is using their personal car for business reasons. The business does not own the car nor pay for any of the expenses. In order to have the business to get the deduction it would either have to give owner credit for equity or pay it in cash. If the business pays in cash then you would not credit owners equity as your credit was cash.
Hope that makes sense.
Mike G, CPA
www.mgfinancial.net
Hey @ayapsych! So, you'd mark the bill as paid when you had incurred and paid out the mileage expense (so for the most part you'd be doing this as you created the bill). Leaving the bill unpaid would affect your expense reporting in that it would show as money still owed. You may want to do this in situations where you know of and want to record a mileage expense in advance, but I think the circumstances would be rarer. Essentially it functions to get the mileage expense into Wave so that you can track it!
Hey Wave! I hate to be Captain Obvious, but why don't you just add a mileage feature instead of trying to find a work-around? It would probably be one of the easiest updates you ever designed and everybody would be sooooo grateful.
Thanks for the feedback here @FJM. While this currently isn't on a radar for a future roadmap, once we do have something in the works for this particular feature, we will be sure to let all of our users know and update you in this thread!
In Canada, for a small business proprietor, you can only write off a portion of actual expenses that is calculated based on kilometres driven for business vs total km driven - you cannot write off a flat rate for mileage; this will cause problems for you. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses/motor-vehicle-records.html
This may be different with employees, but the article doesn't even mention this extremely important distinction.
Hi @JMM . Thanks for sharing this info with our Canadian business owners. Because we do provide Payroll for both Canadian and American businesses, we make sure to add info pertaining to the differences in rules that businesses face in the middle of the article in red. We don't want to inaccurately provide guidance on rules which frequently change which is why we advise to seek guidance from an accountant to reduce the risk of an audit.
Thanks! I'm new with Wave and am finding it extremely useful in setting up my new business.
Hey @vjs . Glad to hear you're enjoying Wave and you find it useful in setting up your new business
. It sounds like what you're doing is adding an income transaction, instead of creating a Journal Transaction. Under the More option in the top right corner of the page, you should have an Add journal transaction option. By doing so and following the steps in the article, you should be good to continue entering mileage into Wave.
I hope you are planning to add a mileage feature. I switched to wave from Quikbooks self employed because WAVE is a nicer program, but I miss the mileage tracker from Quikbooks.
@lindas_garden14 In full transparency, it's not currently on the roadmap, mainly because a lot of the accounting resources are currently being focused on new upgrades to the transactions and reconciliation tools in Wave - which we are super excited about! In saying that, the roadmap is always being reconsidered, so it may be something that may be explored in the future.