As a self-employed person or entrepreneur, it is important to keep good trip records. That is an overview of all kilometres driven. Such an overview is especially important if you have a company car or make business mileage with your own car. Because this way, you avoid problems with the tax authorities and use the benefits that are available. In this article, we will explain to you why trip registration is important, when it is required and how to keep track of it easily.
Why is trip registration important?
With a good trip registration, you can see which kilometres you drive privately and which are business. This is important, because the tax authorities have clear rules about using a company car or your own car for work. If you keep good records of your trips, you will avoid paying too much tax or missing out on tax benefits.
Key situations where trip recording is relevant:
- You have a company car and do not want to pay an additional taxable benefit. In that case, you are not allowed to drive more than 500 kilometres per year privately.
- You drive your own car for work and want to deduct €0.23 per kilometre from tax. Want to know more about mileage allowance ? Read here.
- You use your car both privately and for business and don't want to pay extra VAT.
In a possible audit, you should be able to show how many business kilometres you drove. Are your records not correct at that time? Then you could face a fine or additional tax assessment from the tax authorities.
When is trip registration mandatory?
Trip registration is mandatory if you want to show that you drive less than 500 kilometres per year privately in a business car. This way, you avoid an additional taxable benefit. Even if you use a private car for work and want to deduct those kilometres, you must keep good records of the kilometres. The tax authorities want to see clear and complete records (especially if you use the car for both private and business purposes). Want to know more about the difference between business and private driving your car? Then read our article on buying a car for business or private use.
Requirements of the tax authorities
The tax authorities have written down rules for what should be in a good trip log. You must write down the following details exactly:
- The date of the ride
- Mileage at departure and arrival
- The address where you leave and where you drive to
- The route you drove (if different from normal)
- Whether the trip is business or private
- Any extra kilometres you have diverted privately
Balanced records mean that you have written down all your journeys clearly and completely. This way, the Tax Administration can be sure that your records are correct and there is no reason for doubt.
Ways to track rides
As a self-employed person or entrepreneur, there are several ways to keep track of your journeys. Which way you choose depends on what you like and how many journeys you make per year.
- Manually (on paper or in Excel): This way is cheap. You write down every trip yourself. It does take you a lot of time and it's easier to make a mistake.
- Accounting programmes (such as MoneyMonk): These kinds of accounting tools often have a built-in trip recording function. They are easy to use and link your trips to your records.
For self-employed people with few trips, Excel is often enough. But if you drive a lot, then a programme like MoneyMonk is more convenient and provides more security.
Common mistakes and how to avoid them
Keeping a trip log seems simple, but in practice, mistakes are often made. These are common mistakes and tips on how to avoid them:
- Not filling in on time - Write down every trip you make right away. That way, you avoid forgetting anything.
- Indicating wrong type of journey - Check carefully whether the trip is business or private. By the way, commuting counts as business.
- Erroneous odometer readings - Check that the start and end positions of the trips are correct and logical.
- No backup - Store your data regularly, e.g. online in the cloud. That way, you will never lose anything.
Tips for efficient trip recording
Proper trip recording doesn't have to be complicated, as long as you go about it conveniently. With these tips, you can make it easier for yourself:
- Automate as much as possible: Use an accounting programme such as MoneyMonk. That way you will make fewer mistakes.
- Check every month: Check that everything is correct and correct mistakes immediately.
- Make backups: Make sure you don't lose your data (even if your device breaks).
If you do this properly, you will avoid hassles with the tax authorities and get the most benefit from the tax rules.
