How to pay mileage to owners of vehicles
Submitted by Anonymous on Wed, 2009-07-01 05:16.
Hi Linda,
Just a little question. We have started a LLC but are being taxed as a S-Corp. We own the 2 vehicles that are used in the business. We were told to have the corp pay ourselves mileage at the 55 cents a mile rate rather than the actual expenses as the mileage pay will be more in the long run. This quarter it amounts to around $2900. Our question is who would the check be made to, my husband, myself or both equally or maybe the 70%-30% split that was setup? Also in Quickbooks what expense account would that be classified under? Not really sure the correct way to lay this out. Any help would be appreciated.
Thank You
Teresa
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Mileage Reimbursement
Hi Teresa,
Yep, using the standard mileage rate is much simpler and you will likely get a bigger deduction as compared to actual expenses.
The reimbursement should go to the employee that used the car. For instance say you drove 2000 miles in June & your husband drove 3000 miles & had $25 of parking paid with cash. This might be in either car. You should receive a reimbursement of $1100 (2000 * .55) & your husband's reimbursement would be $1675 (3000 * .55 + 25).
I use a "Automobile Expense" expense. You might also want to have a "Parking and Tolls" sub account. Parking & toll expenses are reimbursed in addition to the standard mileage rate.
Hope this helps.
L:)
Mileage Reimbursement
Hi Linda,
Thanks for the reply about the mileage reimbursement. One other question though. If my husband an I owned the 2 vehicles equally that we have been using, could we write one check made out to both of us as compared to the writing of two checks with a so called breakdown of who drove what vehicle X amount of miles? The question may be confusing but I don't know another way to ask without adding alot of stuff that may not be neccessary to achieve the correct answer. Look forward to your reply about this matter.
Thank You Again
Teresa
Mileage Reimbursement
The key is not who ones the cars but which employee did the driving. But in reality, as long as you have the mileage well documented, you shouldn't have a problem making the reimbursement as you suggest.
Good luck!
L:)
Mileage Reimbursement
Hello Linda,
Thank you for your timely reply. We checked our records and would be able to breakdown the mileage of each vehicle and who drove what vehicle. My husband always drives the van that is used for the business and I keep a weekly mileage log for the miles driven for business and the personnal miles driven on the truck I drive so it wouldn't be any trouble breaking it down. We were told going into the whole LLC being taxed as a S-Corp that keeping detailed mileage records would make it so much easier to keep track of as well as if the situation arose to show those records. Thank you again for your insight to this matter.
Thanks
Teresa
How to pay mileage to owners of vehicles
Hi Again,
Would anyone know the answer to this question? It wouldn't have to be Linda that can answer. Anyone with some knowledge on this subject with an answer would be appreciated. Would like Linda's imput though since she is the authority.
Thanks Again
Teresa
my .02
think of your s corp the same as if you were working some company down the street. what documentation would that employer expect you to provide? they would want details, they would want to pay whoever drove the miles
if this were a couple of employees - would you let them combine their mileage or would you want them to break it down for you. i'd want it broke down - it i hired YOU, i want to see what YOU are doing.
just my .02 - this is how i explain things to our clients - a corporation is a corporation following the same rules and guidelines - no matter if it has 2 employees or is a huge business like walmart or best buy or whatever. whatever falls into the certain corp tax status is all the same.
hope this is clear as mud! :)