Best Bookkeeping Software for Turo Hosts: QuickBooks vs Xero

The most common mistake a new Turo host makes is relying only on the Turo Earnings Report. That report shows you the gross money you received, but it ignores nearly every tax-deductible expense you incurred: depreciation, insurance, mileage, and cleaning. Bookkeeping is mandatory; it is the foundation of profit and tax compliance.

Your goal is simple: Capture every dollar earned and every dollar spent, attributed to the correct vehicle.

Why Turo's Reports Are Not Enough

The Turo Earnings Report is a great starting point for revenue, but it provides a very incomplete picture of your business health. Relying solely on Turo's numbers for taxes puts you at high risk.

The Problem of Gross Income

Turo reports your gross payouts—the money sent to you after Turo takes its commission. This is not your profit. You must subtract all your operational costs to find the true net figure.

The 1099-K Tax Trap

Turo usually sends you a 1099-K (or similar tax form). This form reports your gross income, which is often much higher than your actual profit. If you do not track and report all your deductions accurately, the IRS will tax you on the falsely high gross amount. This mistake can erase a profitable year.

Missing Deductions

Turo has no way to track the following business expenses, which are major tax write-offs:

• Mileage driven for business (to cleaning, maintenance, or delivery)
• The interest paid on your car loan
• The physical depreciation (loss of value) of your vehicle
• The actual cost of cleaning supplies and external detailing services.

Setting Up Your Financial System: The Separation Rule

Before choosing software, hosts must set up a clean, separate structure for their business finances. This separation is key to both simplicity and audit defense.

Dedicated Accounts

You must separate your Turo income and expenses from your personal finances.

• Dedicated Bank Account: Open a separate checking account only for Turo earnings and expenses. Have Turo deposit all payouts here. Pay all Turo bills from this account. This makes bank reconciliation simple and clearly shows the IRS that Turo is a business, not a hobby.
• Dedicated Credit Card: Use a separate credit card (or debit card tied to your business account) for all Turo expenses: gas, detailing, oil changes, subscriptions, and repairs. This creates an automatic, trackable ledger of expenses. Avoid mixing personal gas purchases with Turo gas purchases.

Per-Vehicle Tracking (The Vehicle Ledger)

If you have a fleet of two or more cars, you must track expenses by vehicle. This is the only way to measure true profit per car and decide which asset to sell.

Your tracking system should use tags or columns to attribute every expense to a specific asset:

This level of detail allows you to run profitability reports to see which vehicles are truly earning their keep and which ones are costing you too much in repairs.

Software Comparison: Spreadsheets vs. Automation

The right tool for you depends on your fleet size and your comfort level with accounting.

Option 1: The Spreadsheet (0–3 Cars)

A simple Google Sheet or Excel file works well for hosts with fewer than three cars.

• Pros: It's free, completely customizable, and easy to create a dedicated tab for each car and each expense category.
• Cons: Requires extensive manual entry and is not designed for tax preparation. Data integrity relies entirely on the host. This system is unsustainable past three cars.

Option 2: Full Accounting Software (3+ Cars)

For scaling, you need software that automates bank syncing, categories transactions, and exports data directly for tax preparation (Schedule C).

Option 3: Turo-Specific Tools

Some newer platforms focus entirely on solving the Turo data problem by connecting directly to your Turo API and bank feeds.

• Monily (or similar): These services focus on Turo-specific needs, such as tracking vehicle depreciation, calculating profit per car, and preparing Turo-specific tax filings. While they are not a replacement for a CPA, they handle the complex data attribution that generic software misses.

Tax Tracking Best Practices: Deductions

The two largest potential deductions for Turo hosts are mileage and depreciation. Tracking these correctly is mandatory for minimizing your tax bill.

Tracking Business Mileage

You must track business-related mileage outside of the rental period. These miles include driving to the car wash, getting an oil change, meeting a guest for delivery, or going to the repair shop. The IRS allows you to choose one of two methods:

• Standard Mileage Rate: The simplest method. You multiply all miles driven for business by the IRS standard rate (e.g., 67¢ per mile). This rate covers gas, depreciation, and insurance for those miles.
• Actual Expense Method: You track all vehicle expenses (gas, repairs, insurance) and deduct a percentage equal to your business usage percentage (Business Miles / Total Miles). This is more complex but can yield a larger deduction for expensive, new vehicles.

Best Practice: Use a GPS mileage tracker app (like MileIQ, QuickBooks Self-Employed, or a dedicated GPS tracking device) to log every trip automatically. This defends your deduction against an audit. Do not rely on guessing or estimating these miles.

Depreciation (Loss of Value)

Depreciation accounts for the wear and tear and loss of value on your car. This is usually the largest single deduction for Turo hosts.

• Calculation: The depreciation deduction must be calculated according to IRS schedules. This is complex and should be managed by a CPA or supported by advanced software like QuickBooks. You cannot use the deduction if you use the Standard Mileage Rate.
• Section 179: Some hosts may qualify to deduct a significant portion of the car's purchase price in the first year using Section 179 or Bonus Depreciation, especially for large SUVs or trucks used primarily for business. This is an advanced strategy that absolutely requires a CPA's guidance.

Other Deductible Expenses to Track

Make sure you are capturing these everyday expenses that reduce your taxable income:

• Turo Fees: The commission Turo takes (usually 15-35% of the trip price).
• Commercial Insurance: The cost of your specialty commercial liability insurance (e.g., Tint or ABI).
• Cleaning: The cost of cleaning supplies, air fresheners, or outside detailing services.
• Software and Subscriptions: Costs for GPS tracking, pricing tools, bookkeeping apps (QuickBooks, etc.).
• Tolls and Tickets: Any parking tickets or tolls you must pay off and then charge back to the guest.
• Interest: The interest portion of your car loan payment.

Pay Your CPA With Clean Data

Bookkeeping is the backbone of your Turo business. By setting up dedicated accounts and choosing software that forces you to attribute costs to each car, you transform a chaotic income stream into a manageable business.

The best practice is to track everything in real time. This ensures you pay your CPA with clean, accurate data, allowing them to focus on maximizing your tax deductions (like depreciation), instead of wasting their time correcting disorganized reports. This saves you money both in accounting fees and in taxes.

Frequently Asked Questions (FAQ)

Q1: Do I need a CPA for Turo?

A: Yes. Turo taxes are complex (1099-K, Schedule C, depreciation, self-employment tax). A CPA or tax professional should be used to file your return. They save you more money than they cost.

Q2: Does Turo track my tax-deductible mileage?

A: No. Turo only tracks the mileage driven during a guest's trip. You must use an external app or log to track your mileage for cleaning, maintenance, and delivery runs.

Q3: What tax form do Turo hosts receive?

A: Turo usually issues a Form 1099-K, reporting your gross payouts for the year.

Q4: What is the most important deduction to track?

A: Depreciation and the business use percentage of your vehicle expenses (maintenance, insurance, interest).