If you have a commercial vehicle; a bus, taxi, transport truck, or any vehicle similar, you do not have to track traveling unless required for an internal tracking system.

However, for those of you who use their vehicle for both business and personal the answer is YES, you MUST track your vehicle use.  Many entrepreneurs are under the assumption that they can just utilize a percentage and its okay.  It’s not.  Like every business expense, you need proof and in this area, the proof is in the travel log.

What is a log?  It is a form you create or one you purchase that tracks kilometers or miles traveled.  Each year you start with a number taken from your odometer.  Depending on your business, you create a model to track your traveling.  Yes, it can be time consuming, aggravating, but it is well worth it in an audit. 

Each year the percentage you claim, proven with your log, gets deducted as a business expense as well as the depreciation of the vehicle. 

What we have discovered is that entrepreneurs who log their travel, usually have greater deductions than their "guess-stimates".  If that alone is not worth the frustration of keeping a log, then having the deductions disallowed by an auditor may be a good enough reason to do one.

Dick and Andy