How to Calculate Business Expenses for Mileage for a C Corp With a Home Office
Original post by Craig Woodman of Demand Media
The use of a vehicle to move people or things for a business is an expense related to business profit and is deductible on the business's income taxes. This is true with a C corporation as well as any other type of business. While a corporation can deduct the actual expenses incurred in the use of the vehicle, many companies benefit more by claiming expenses for the mileage that the vehicle is used for business. The process for calculating mileage is the same for a corporation if the office is located in a home or commercial office building.
Create a business mileage log for each vehicle. Include in this log book columns for the date and beginning odometer reading. Allow for an area to describe the purpose of the trip and if it is for business or personal reasons. Create columns for the ending odometer reading and the total mileage of the trip.
Place a log in each company vehicle. Consider using a clip or other device to hold the logbook on the dash or in another easily accessible area of the vehicle. If the record is easy to find and use, employees are more likely to complete the log entries regularly and accurately.
Establish a written policy about personal and business use of the vehicle. This policy could be helpful in case of an IRS audit that reviews vehicle business expenses and mileage deductions. You may also need to report personal use of a company vehicle by an employee.
Train your employees on the mileage logs and make sure that they understand the importance of keeping these records accurately. Collect the logbooks from the employees regularly and verify the entries are being made correctly and accurately.
Multiply the total number of miles that the vehicle has been used for business by the business mileage rate determined by the IRS. As of 2011, that rate is $.50 per mile for business use. This amount is the total amount of allowable business expenses by mileage. If an employee is using his own vehicle for business, you can pay him for each mile of business use and deduct those payments as an expense to the corporation.
Tips & Warnings
- Include in your mileage logbooks a place to enter parking and toll expenses paid for by the corporation. These expenses are deductible in addition to any mileage expenses. Keep records for a couple of years to determine if you would save more by deducting the business use per mile or the actual business expenses for the vehicle.
- IRS.gov: Publication 463: Travel, Entertainment, Gift, and Car Expenses
- "Entrepreneur"; Business Expenses to Deduct Now; W. Rod Stern, et al.; March 2008
About the Author
Craig Woodman began writing professionally in 2007. Woodman's articles have been published in "Professional Distributor" magazine and in various online publications. He has written extensively on automotive issues, business, personal finance and recreational vehicles. Woodman is pursuing a Bachelor of Science in finance through online education.