What a good log contains
For each business trip record the date, starting point, destination, business purpose and miles driven. Also note the odometer reading at the start and end of the year. Entries made at the time of the trip are more credible than ones rebuilt later from memory.
Commuting from home to a regular workplace is generally not business mileage, but trips between work locations may be. Ask your tax preparer how your situation is treated.
Ways to log
A paper notebook in the glove box works. So does a spreadsheet or a phone app that tracks trips automatically. Whichever you choose, review it weekly so gaps are caught. A log with obvious holes or round numbers looks unreliable.
If more than one vehicle is used, keep a log for each.
Standard mileage or actual expenses
There are two common methods. The standard mileage method applies an IRS-published rate per business mile and covers most operating costs. The actual expense method deducts the business share of gas, repairs, insurance, registration and depreciation. The rate changes, so look up the current one on the IRS website.
Rules about switching methods and about first-year choices exist, so decide with your tax preparer before the first year of use.
Recording it in the books
With the standard method, post a periodic entry for the mileage deduction, using the log's total miles times the rate. The offset may be an owner reimbursement or equity entry if the vehicle is personally owned. With actual expenses, code fuel, repairs and insurance paid from business accounts to vehicle categories and carve out personal use.
If the vehicle is owned by the business, record it as a fixed asset and depreciate it. Employee mileage reimbursed under a written policy should be tracked on a separate line.
Records to keep
Keep the log, purchase records, loan statements and receipts for the repairs and fuel if you use actual costs. Save year-end and start-of-year odometer photos. Keep them for the period recommended by the IRS and your tax preparer.
If a vehicle is used partly for personal reasons, the personal share is not deductible. Be honest and consistent, and note the percentage calculation in your records.
Common vehicle record mistakes
Frequent problems include logging only the destination without a purpose, claiming every mile of a vehicle that is also the family car, and forgetting to log short trips that add up over a year. Another is mixing methods across years without checking the rules. A monthly review of the log against your calendar catches most of these. Photos of the odometer at year start and end provide a simple cross-check.
Common questions
Can I reconstruct a log after the fact?
It is much weaker than a contemporaneous one. Use calendars and receipts to help, and start logging now.
Does the mileage rate change?
Yes, usually each year. Check the current figure with the IRS.
What about leased vehicles?
Lease costs and deduction limits have special rules. Ask your tax preparer.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.