Uses and needs of Mileage reimbursement for employees

About Mileage reimbursement

Mileage reimbursement means giving some compensation to employees who have used their own cars, vans, panel trucks or pickups for the company purposes. The company mileage reimbursement rate may vary each and every year. Most of the companies follow the IRS rules for mileage reimbursement. This year, the Mileage reimbursement rate is 54.5 cents for a single business mile driven. The employee calculates the mileage for both reaching the client place and returns to the office. The mileage reimbursement rate may vary based on the vehicles. It includes the expense of gas, standard maintenance, insurance, registration fee, and depreciation.

How does it work?

Employees must note the mileage driven for the company. Some of the companies provide the mileage reimbursement forms which includes the details of date, business purposes, origin, miles travelled, total miles, destination ,etc.

The employee should keep up-to-date record for mileage reimbursement and some companies provide the mileage reimbursement either monthly or once a year. The company may pay the mileage reimbursement via bank transfer or check.

The company’s mileage reimbursement rate is allocated by the manager after the submission of the reports. The Fair Labour Standards Act says the company should pay the mileage reimbursement to the employee without reducing their minimum wage.

Benefits of giving the mileage reimbursement

There are many benefits in the mileage reimbursement schemes:

• Workers may be more willing to go to the business-related trips outside of work.
• They won’t have to worry about the costs involved with business trips.
• Another benefit is the company does not need to buy and maintain the separate vehicle for the business works.
• If the mileage reimbursement pay is low enough, then it may be given tax-free to the employee.

The company mileage reimbursement rate is high if the mileage driven is high; if the mileage is driven is low then the pay will be lower. Forgetting mileage reimbursement, the employee should have their driver’s license, insurance for that vehicle, and all other legal documents.

The employee has the responsibility to keep the genuine mileage reports. They do not add the mileage driven for personal use and the company will likely check the report before making payment. These days, most companies provide GPS enabled smartphones or devices which will automatically calculate the mileage. This enables them to prevent potential fraud in mileage reports while making the process more convenient for the employee as they won’t have to write anything down. This new technology is also used to help guide the driver to the destination in a cost-efficient manner. It may also be used as proof if the company fails to pay the mileage reimbursement to the employee.