3 Things You Should Know About Mileage Reimbursement

As a budding entrepreneur, it’s obvious you can’t be able to handle all the tasks on your own. This is because you can only handle one task at a time. You, therefore, have to delegate some of the tasks to your employees. If your employees use their personal car while running such errands, you are supposed to give them mileage reimbursement. Some of the tasks that call for mileage reimbursement include delivering orders to customers, going for a meeting with clients, collecting materials that are needed in your production processes from the vendors and going to the bank. In fact, the laws on mileage reimbursement vary from one state to the other. This means that there are some states where it’s a must while others leave it to the discretion of the employer. However, most employers don’t know how to handle issues that revolve around mileage reimbursement. Here is a list of things that you should know about reimbursing your employees for the miles covered while on duty.

1. Employees Must have Used Personal Car to Qualify

Mileage reimbursement is only given to employees that use their private cars. The reimbursement caters for various expenses that they might have incurred while on the road such as insurance, gas, oil and minor repairs due to tear and wear. This means that an employee can’t receive mileage reimbursement if they used the company car to run some errands. As an employer, you have the option of including the reimbursement in the employee’s salary or writing a different check. In fact, there are some employers that have a dedicated modern payroll system for handling reimbursements. This is done to avoid confusion during the submission of such funds because they normally coincide with the issuance of wages.

2. The Rate is based on Miles Covered

The rate of mileage reimbursement is usually based on the distance that an employee has covered using his personal car. The rate is actually very dynamic. You must, therefore, check the IRS website at the beginning of every year to avoid using an outdated rate. Although the rate is set by the IRS, employers are allowed to use their own rate. As a matter of fact, money is exempted from taxation. However, employers that exceed the rate that’s recommended by IRS are required to pay tax from their reimbursement earnings. Although the majority of employees record the miles they have covered on a piece of paper, it’s advisable you use an app such as TripLog because it monitors and records mileage digitally. Employees can’t, therefore, manipulate its data like they do when using paper sheets. Fortunately, the app is supported by all operating systems that are used on mobile devices, including iOS, Android and Windows.  

3. Creates a Win-Win for All Parties

This one actually goes without saying. When employees are not compensated for the errands that they handle using their personal car, they feel exploited. This is because they have to cater for any unforeseen expenses that might arise while on their way to meet a client. Such employees are not usually willing to handle the tasks that are not included in their job description. This causes them to hesitate in performing their duties which in result causes their productivity to dwindle. But when you maintain a habit of reimbursing them, they will feel satisfied when handling such duties. In fact, employees feel appreciated. This encourages them to work harder toward meeting the goals of their employer.

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