Simon--
That's pretty much what I found too:
https://www.sadaccountant.com/journal-entry-for-mileage-expense-simple-guide/
"The best approach: Use a separate tracker instead of adding these figures to the general ledger or booking a journal entry."
Alternative: "Debit Mileage Expense and credit Owner’s Equity."
It just annoys me to maintain a separate record; always like to have things in one unified place.
But maybe I can think it through. There are two entities involved here: me (CWR) and the business. The business does not own a car. CWR uses his own private car for a business trip, for the benefit of the business. So the tax deduction is CWR's, not the business's. Hence the advice that CWR should keep his own separate mileage log, and deduct it from his own incom, and none of this goes into the business books at all.
However, the business is a single-member LLC, which the IRS considers a "disregarded entity." Meaning yes, the business is a separate *legal* entity, but CWR and the business are a single *tax* entity. All business income (or losses) are considered to be CWR's income (or losses.) There is only a single tax return. That's where it gets confusing.
I wonder if it would be clearer if the business *paid* CWR for the use of CWR's car on the trip. CWR would then *not* be eligible to deduct mileage costs on CWR's tax return, because they were reimbursed by the business. But CWR's tax return *also* includes the business (schedule C). And the business incurred an expense (paid CWR for use of CWR's car). So journaling that would have the same effect as CWR taking the income tax deduction. The journal entry would look like"
2024-05-06 check to CWR ; pay owner for use of car to travel to trade show
expenses:travel 225.12
assets:checking -225.12
What do you think?
--
Chris Ryan
rya...@fastmail.co.uk