Avoid This Business Money Pit

Avoid This Business Money Pit

Avoid This Business Money Pit

If you are in outside sales, consulting, or another service-based business, you probably rack up several miles on your car. We jump into our cars to visit clients, attend networking events, participate in meetings, and run the myriad of errands required by our businesses. We take our cars for granted because we would use them anyway whether we are in business or not, true? They are always there waiting to sweep us away to impress a client with our customer service. We never receive a bill for using our cars, until they need repair and then watch out. Service bills can average $300 to $1,000 depending upon the age of the vehicle.

Typically, we do not think about mileage until tax time. Many people do not keep detailed records of their mileage during the fiscal year only to "estimate" a figure while sitting in front of the tax accountant. A smile appears across their face as they see that the figure they estimated was a significant operational cost thereby allowing them to keep more of their net income. Usually, that is the last time they think about it until the following year when the pattern is repeated again. After all, the government 2009 deduction figure of $0.50 per mile isn't really costing them that, right?. Actually, it is. The cost can be several thousand dollars!

The question is, how much of your annual mileage was truly necessary and how much of it could have been avoided by using other, less costly, methods of communication? Many business owners would defend their miles driven as all necessary. This common response is given as a justification for not keeping better track of the miles in terms of the number of round-trip miles, to which destination, and for what reason. For those who fit into this scenario, take a look at your past appointments and determine the number of round-trip miles to those appointments multiplied by their monthly frequency. This will yield a more accurate mileage figure than last year's tax record estimate.

For those of you who have accurate mileage records, review them and challenge the reasons why the most frequent trips were necessary. Lower mileage destinations traveled frequently, can add up to more than the long-distance trips traveled less frequently.

Many clients do not need as much in-person time as we think. Have the conversation with the client about what they want or expect. They may feel just as cared for if some communication was accomplished through email, phone, text messages, or video conferencing. It is important to find out to keep mileage costs at reasonable levels. Our cars are a resource we use up. At some point, we have to buy or lease another vehicle. Why not manage mileage wisely with the car we have now?

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