Business Mileage Record Keeping Requirements for Company-Owned Vehicles - What Documentation is Needed?

Your current system is technically insufficient for IRS requirements. For company-owned vehicles, the IRS expects contemporaneous mileage logs regardless of whether you're using actual expenses or standard mileage rate. The distinction is that with company vehicles, you need to document business use rather than personal use (opposite of personal vehicles). While many small business owners follow similar practices to yours, during an audit the burden of proof is on you to substantiate business use. Without a regular log, the IRS could potentially disallow a portion of your vehicle expenses by assuming more personal use than you're reporting. The safest approach is keeping a simple log with date, starting location, destination, purpose, and odometer readings. Digital mileage apps make this much easier than paper logs. The good news is you don't need elaborate detail - just enough to show the business purpose of each trip.

I was in almost the exact same situation with my landscaping business (S-Corp with 3 company trucks) and discovered a lifesaver called https://taxr.ai after getting flagged for a vehicle expense audit. I was only tracking personal miles like you and the IRS auditor wasn't having it. The taxr.ai system analyzed my gas receipts, service records, and calendar appointments, then helped me reconstruct a defensible mileage log that satisfied the auditor. It saved me from having thousands in deductions disallowed. The system even flags potential issues before they become audit triggers. For company vehicles using actual expenses, you definitely need more than just personal mile tracking - you need to document the business purpose of the remaining miles too, which is what I was missing.

I was wrong about the taxr.ai thing. I signed up after my previous comment and holy crap it actually works. I've been dreading redoing my mileage logs for 2023 but this parsed through my Google calendar, emails, and even my quickbooks data and automatically matched up client addresses with my trips. Saved me at least 20 hours of painful reconstruction work. It even flagged some potential red flags in my documentation patterns that could trigger an audit. Now I'm using their mobile app to track ongoing mileage which is way easier than my old paper logbook. Definitely recommend for any business owner with company vehicles.

After fighting with the IRS for 3 months over vehicle deductions last year, I discovered https://claimyr.com which got me through to an actual IRS agent in 45 minutes instead of the 3+ hour wait times I was experiencing. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that for company-owned vehicles, you need records showing the business purpose of trips, not just personal mileage logs. He specifically mentioned that actual expense method requires documentation of business use, and simply tracking personal use and assuming the rest is business isn't sufficient. After getting clear guidance, I was able to properly document my vehicles and successfully resolve the audit. Don't wait until you're being audited to fix your documentation - it's much harder to reconstruct later.

Update on my skeptical comment earlier - I broke down and tried Claimyr last week when I needed to talk to the IRS about a vehicle deduction question similar to the original post. Honestly, I'm eating my words now. Got a call back in 37 minutes with an actual IRS rep on the line. The agent confirmed what others have said here - for company vehicles using actual expenses, you need to document the business purpose of trips, not just track personal use. She recommended using a mileage app that logs starting point, destination, and business purpose at minimum. Apparently this is one of the most common audit issues for small businesses with company vehicles. Worth every penny to not waste half a day on hold!

I've been a tax preparer for 15 years and the advice here is mostly correct but missing a few key points. For S-Corp owned vehicles, there are actually two separate record-keeping requirements: 1. You need records to substantiate the business use percentage for the company's tax deduction 2. You need to properly report personal use as a taxable fringe benefit on your W-2 Your current system only addresses the second part. For the first part, the IRS technically requires contemporaneous records showing business purpose. However, in practice, I've had clients successfully defend their deductions with: - Service call records/invoices showing destinations - Appointment calendars with client locations - Recurring business routes that can be documented as patterns The key is being able to establish that the primary use of the vehicle is for business. Since your trucks have specialized equipment and are clearly business vehicles, you have a stronger position than someone with an unmarked passenger vehicle.

Just went through an S-Corp audit last year where vehicle expenses were scrutinized. Here's what the auditor actually looked for: - Were the vehicles listed on our business insurance policy? - Did we have a written company policy about personal use of vehicles? - Did we track personal use and include it on W-2s as taxable compensation? - Could we show a reasonable business purpose for our claimed business miles? We didn't have perfect daily logs, but we did have client invoices showing job sites visited, Google Maps history, and a calendar with appointments. That was enough to satisfy the auditor for most of our usage. They were mainly concerned about making sure we weren't claiming personal vehicles as 100% business. The fact that your trucks have toolboxes and work equipment installed actually helps your case a lot. Take photos of these modifications as additional documentation.

As someone who went through a similar situation with my HVAC business, I'd recommend implementing a simple digital tracking system sooner rather than later. I used to think my basic personal mileage tracking was sufficient until I got audited. The IRS agent explained that with company-owned vehicles, they expect you to substantiate the business use, not just track personal use. What saved me was that I had service tickets with addresses, which helped establish business patterns, but it was still stressful reconstructing everything. Now I use a basic mileage app that automatically starts tracking when I get in the truck and lets me quickly categorize trips as business or personal with a tap. Takes maybe 10 seconds per trip but gives me solid contemporaneous records. The peace of mind is worth it, especially since vehicle expenses are one of the most commonly audited items for small businesses. Your work trucks with custom equipment definitely help establish business purpose though - that's a strong indicator that these aren't personal vehicles being used occasionally for business.

I'm dealing with a similar situation with my plumbing business - we have two service vans that are clearly commercial vehicles (ladder racks, company logos, tool storage). What I learned from my tax attorney is that the IRS views company-owned vehicles differently than personal vehicles used for business. The key distinction is that with company vehicles, you're essentially trying to prove the business percentage to justify the company's expense deduction. Your current system of just tracking personal miles and assuming everything else is business could be problematic in an audit because you're not actually documenting the business purpose of those miles. I ended up implementing a simple system where I keep a basic log with date, starting location, destination, and purpose (like "service call - Smith residence" or "supply run - Home Depot"). For routine trips like weekly supply runs or regular client routes, I document the pattern once and then just note the dates. Takes maybe 2 minutes per day but gives me solid documentation. The reality is that most small business owners handle it like you do, but if you get audited, having contemporaneous records showing business purpose makes the process much smoother. Given that vehicle expenses are red flags for auditors, it's worth the small effort to protect potentially thousands in deductions.

I appreciate everyone sharing their experiences here - this has been incredibly helpful! After reading through all the responses, I realize my current system is indeed inadequate for proper IRS compliance with company-owned vehicles. It sounds like the consensus is clear: I need to document business purpose for trips, not just track personal use. The distinction between personal vehicles used for business versus company vehicles used occasionally for personal use is something I hadn't fully grasped. I'm going to implement a simple tracking system starting next week. Based on the advice here, I'll keep a basic log with date, destination, and business purpose. For my regular routes (weekly supply runs, bank deposits, etc.), I'll document the pattern once and then just log the dates. For client service calls, I'll note the client name and general location. The point about my trucks having custom racks and toolboxes being helpful documentation is reassuring - I'll definitely take photos of those modifications as suggested. And honestly, the peace of mind aspect that several people mentioned is worth the small daily effort, especially given how commonly vehicle expenses get audited. Thanks everyone for the reality check. Better to fix this now than deal with an audit situation later!

Great discussion here! As someone who runs a small construction company with 4 company trucks, I went through this exact learning curve about 3 years ago. What really opened my eyes was talking to other contractors who had been audited - turns out the "track personal miles only" approach is incredibly common but not actually compliant. The game-changer for me was realizing that the IRS views this as "prove your business use" rather than "prove your personal use." Once I understood that distinction, setting up proper tracking became a no-brainer. I use a simple smartphone app that lets me quickly log trips with voice-to-text while I'm walking to the truck. Takes maybe 15 seconds to say "Supply run to Ferguson Plumbing for Johnson job materials" and it logs the entry with timestamp and location. The key is making it so easy that there's no excuse not to do it. For what it's worth, your S-Corp structure actually gives you some advantages here since the vehicles are clearly business assets. Just make sure you're documenting that business use properly. The custom equipment and toolboxes definitely help establish business purpose, but contemporaneous mileage logs are still your best protection in an audit situation.

I've been following this discussion as a fellow small business owner, and it's been really eye-opening! I run a small HVAC company with two service vans, and I've been doing exactly what the original poster described - just tracking personal use and assuming everything else is business. What strikes me most is how many people here have gone through audits and learned these lessons the hard way. It's clear that the IRS really does expect documentation of business purpose, not just personal use exclusion, for company-owned vehicles. I'm curious about one practical aspect that hasn't been fully addressed - for those of you who have employees occasionally driving company vehicles, how do you handle the tracking? Do you require them to log trips too, or do you handle it differently since they wouldn't have personal use? I have a part-time helper who sometimes takes one of the vans to pick up supplies or deliver equipment to job sites. Also, for the original poster and others implementing new systems - has anyone found a good balance between thoroughness and practicality? I'm worried about starting too ambitious and then abandoning the system when it becomes cumbersome during busy seasons.

This thread has been incredibly valuable! As someone who's been putting off proper mileage documentation for my electrical business, reading through everyone's experiences has been a real wake-up call. What really resonates with me is the distinction between "prove business use" versus "prove personal use" that several people mentioned. I've been approaching this completely backwards, thinking that since my work truck is obviously a business vehicle, I only needed to account for the occasional personal trips. The practical solutions shared here - especially the voice-to-text logging and pattern documentation for routine trips - make this seem much more manageable than I initially thought. I was imagining having to write detailed descriptions for every single trip, but "supply run - Home Depot" or "service call - residential" seems sufficient based on the audit experiences shared. I'm planning to start with a simple smartphone app next week and focus on building the habit first. The 15-second voice logging approach sounds perfect for someone who's constantly moving between job sites with dirty hands. Thanks to everyone who shared their real-world experiences, especially those who went through audits. Sometimes you need to hear from people who've actually dealt with the IRS rather than just reading general tax advice online.