Effortlessly Tracking Vehicle Usage for Multiple Businesses: A QuickBooks Online Vehicle Tracking

Navigating the complexities of vehicle usage tracking across multiple businesses can be a daunting task, but with QuickBooks Online, it becomes a manageable and streamlined process: a guide to QuickBooks Online Vehicle Tracking

When it comes to managing finances for multiple businesses, especially when they involve different legal structures like sole proprietorships and corporations, things can get complicated quickly. One area that often causes confusion is tracking vehicle usage across these entities. If you’re using QuickBooks Online vehicle tracking to manage your bookkeeping, you’re in luck – this powerful tool can help streamline the process and ensure accurate record-keeping. Let’s dive in the QuickBooks Online Vehicle Tracking:

QuickBooks Online Vehicle Tracking

Understanding the Scenario

Let’s break down the situation at hand. You’ve got an individual who owns two businesses:

  1. A sole proprietorship LLC
  2. A corporation S Corp

They’re using a personal vehicle for both businesses, as well as for personal use. The usage breakdown looks like this:

  • 25% for the sole proprietorship
  • 25% for the corporation
  • 50% for personal use

Now, the million-dollar question is: How do you properly account for this in QuickBooks Online, especially when it comes to reimbursing the owner for the corporation’s vehicle usage?

Setting Up Your QuickBooks Online for Vehicle Tracking

Before we dive into the nitty-gritty of reimbursement, let’s make sure your QuickBooks Online is set up correctly to handle vehicle tracking.

Step 1: Enable Mileage Tracking

First things first, you’ll want to enable mileage tracking in QuickBooks Online. Here’s how:

  1. Go to the Mileage section in the left navigation menu.
  2. Click on ‘Add a vehicle’ to set up the vehicle in question.
  3. Enter the vehicle details, including make, model, and year.

Step 2: Set Up Mileage Rates

QuickBooks Online allows you to set custom mileage rates. This is crucial for accurate reimbursement calculations. To do this:

  1. Go to the Mileage section.
  2. Click on the gear icon next to ‘Add trip’.
  3. Select ‘Mileage settings’.
  4. Enter your custom mileage rate.

Tracking Mileage for Each Business with QuickBooks Online Vehicle Tracking

Now that your QuickBooks Online is set up for vehicle tracking, it’s time to start logging those miles. Remember, accuracy is key here!

For the Sole Proprietorship LLC

Since the sole proprietorship is part of the individual’s personal finances, you’ll want to:

  1. Log all vehicle-related expenses in the personal/sole proprietorship QuickBooks account.
  2. Use the mileage tracker to record all business-related trips for the sole proprietorship.
  3. At the end of each month or quarter, run a mileage report to see the total miles driven for the sole proprietorship.

For the Corporation

Here’s where things get a bit trickier. Since the vehicle is personally owned but used for corporate business, you’ll need to:

  1. Track all corporate-related trips separately in the mileage tracker.
  2. Run regular mileage reports for the corporation’s usage.

The Reimbursement Conundrum

Now, let’s address the elephant in the room: How do you properly reimburse the owner for the corporation’s vehicle usage? The good news is, your instinct is correct. The best way to handle this is to have the corporation write a check to the owner for the 25% usage. This is indeed considered a vehicle expense, not an owner distribution. Here’s how to handle this in QuickBooks Online:

  1. Calculate the reimbursement amount:
    • Take the total vehicle expenses for the period (gas, maintenance, insurance, etc.)
    • Multiply this by 25% (the corporation’s usage percentage)
  2. In the corporation’s QuickBooks Online account:
    • Create a new expense
    • Select the owner as the payee
    • Choose ‘Vehicle Expenses’ as the category
    • Enter the calculated amount
    • In the memo, note that this is for vehicle usage reimbursement
  3. When you actually write the check:
    • Go to the Banking menu
    • Select ‘Write Checks’
    • Fill in the details, matching them to the expense you created

By doing it this way, you’re ensuring that the corporation is accurately recording its vehicle expenses, while the owner is being properly reimbursed for the use of their personal vehicle for corporate business.

The Importance of Detailed Record-Keeping

I can’t stress enough how crucial it is to maintain detailed records of all vehicle usage. This isn’t just about making your bookkeeping easier – it’s about being prepared for any potential audits. QuickBooks Online makes this easier with its mileage tracking feature. For each trip, make sure you’re recording:

  • The date of the trip
  • The starting and ending locations
  • The purpose of the trip
  • Which business the trip was for (sole proprietorship or corporation)

These details will be invaluable if you ever need to justify your vehicle expense claims to the IRS.

Maximizing Tax Deductions

One of the big advantages of accurately tracking vehicle usage is the potential for tax deductions. Both the sole proprietorship and the corporation can benefit from this. For the sole proprietorship, vehicle expenses can be deducted directly on Schedule C. The corporation, on the other hand, can deduct the reimbursements it pays to the owner as a business expense. QuickBooks Online can help you keep track of these deductions. At tax time, you can run reports that will show:

  • Total miles driven for each business
  • Total vehicle expenses for the year
  • Reimbursements paid by the corporation

This information will be gold when it comes to filling out your tax returns!

The Power of QuickBooks Online Reports

Speaking of reports, let’s dive a little deeper into how QuickBooks Online can help you analyze your vehicle usage and expenses.

Mileage by Vehicle Report

This report shows you the total miles driven for each vehicle, broken down by business purpose. It’s a great way to verify that your usage percentages are accurate.

Vehicle Expenses Report

This report gives you a detailed breakdown of all vehicle-related expenses. You can use this to calculate the total cost of operating the vehicle, which is crucial for determining the correct reimbursement amount.

Profit and Loss Report

While not specifically a vehicle report, the Profit and Loss report can help you see how vehicle expenses are impacting your overall business finances. For the corporation, you’ll see the reimbursements listed as an expense, giving you a clear picture of how vehicle usage is affecting the bottom line.

Best Practices for QuickBooks Online Vehicle Tracking

To wrap things up, let’s go over some best practices to ensure you’re getting the most out of QuickBooks Online for vehicle tracking:

  1. Be consistent: Set a regular schedule for entering mileage and expenses. This could be daily, weekly, or monthly, depending on your needs.
  2. Use the mobile app: QuickBooks Online has a great mobile app that allows you to track mileage on the go. This can be a game-changer for accuracy.
  3. Regularly reconcile: Make sure your tracked mileage and expenses match up with your bank statements and receipts.
  4. Keep physical records: While QuickBooks Online is great, it’s always a good idea to keep physical copies of receipts and mileage logs as a backup.
  5. Review regularly: Take time each month or quarter to review your vehicle usage and expenses. This can help you spot any issues early and make adjustments as needed.
  6. Stay updated: QuickBooks Online regularly updates its features. Keep an eye out for any new tools or reports that could make vehicle tracking even easier.

By following these practices and utilizing the full power of QuickBooks Online Vehicle Tracking, you’ll be well on your way to mastering the art of vehicle tracking for multiple businesses. Remember, accurate record-keeping isn’t just about staying organized – it’s about maximizing your tax deductions and ensuring your businesses are running as efficiently as possible.

So, the next time you hop in your car for a business trip, whether it’s for your sole proprietorship or your corporation, you can rest easy knowing that QuickBooks Online has got your back. Happy tracking and contact us if you need help.

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