There are two types of owner-operators: the first are those who pay too little attention to accounting. They consider this an optional part of the business and are more engaged in cargo search than documentation. The second type of owner-operators is those who are so afraid of accounting that they don’t even touch it. These people understand the importance of accounting but are so afraid that they give up. In both cases, the cargo transportation business is going to collapse. Accounting is an integral part of business, but it’s not as scary as it seems. This allows you to organize all your expenses and gives you an idea of the work of your business. But truckers, due to a lack of experience with accounting, can make many mistakes in trucking accounting, as they say here.
And today, we will sort everything out and tell you about all aspects of accounting.
All about tax experts and accountants
Firstly, you should know that there are a large number of specialists in such an expansive industry accounting for cargo transportation. The key ones are expert advisors and certified public accountants. What is their difference? The first (EAS) is focused only on taxes — these are essential specialists, given the specifics of the cargo transportation industry. After all, you should always keep abreast of taxes in different states and countries. Certified Public Accountants (CPA) are engaged in a wide range of accounting — from taxation to enterprise finance.
Being a truck driver involves more than just driving. It’s a business that requires careful financial management to ensure profitability and sustainability. From tracking expenses to managing invoices, accounting plays a crucial role in the success of truck drivers. If you’re a truck driver looking for ways to streamline your accounting processes and better manage your finances, you might find it beneficial to visit website for more information on specialized accounting services that cater to your unique needs.
So, let’s talk about taxes first. This is a big topic for owners-operators who work all over the USA. You should keep in mind both state tax rules and federal regulations. For these purposes, you can hire an expert or a team of specialists who are engaged in the following:
- tax savings;
- budget and expenditure planning;
- control of compliance of regulations with the rules of your company;
- filling out tax returns;
- cash flow analysis;
- credit and debt management.
Is there any difference between accounting and bookkeeping?
This is important to understand before hiring experts. Because they can get confused and lose sight of critical business aspects.
So, bookkeeping is essentially keeping your account book, as the name implies. And if you don’t know this, you can decide that this is all you need. But, since you are not an ordinary man in the street but a businessman, you should know that the ledger is only one part of this area. Moreover, you can handle the bookkeeping yourself. After all, you already track your miles, fuel purchases, and food expenses on the road.
Accounting is a broader aspect of work that includes financial records, the development of financial statements, cash flow analysis, and tax planning. It is more complicated than keeping accounting books. Therefore, it is recommended to choose specialists with a comprehensive profile who can manage your money and taxes, not just records. Of course, an accountant will not tell you the best trucking GPS, but he will fully handle the finances of your business.
Rules for trucking accounting
Even if you hire a team of experts for accounting, it’s still worth knowing about the basic rules and obligations to keep your finger on the pulse.
1.Separate Business Accounts
Separate your personal bank account from your business account. Maybe it will seem obvious to someone, but many people need to remember this important detail and experience difficulties. For example, it will be difficult to separate personal expenses from business expenses for a tax return.
2.Type of legal entity
If you are an owner-operator, you are most likely registered as an individual entrepreneur. Yes, we are not witches; this decision is made by 90% of truckers who start their businesses. This is a good choice, but the problem is that you and your cargo business are starting to be one. And there may be problems with this if you ever have to deal with problems in court. What is offered in return? Registration as a limited liability company (LLC) or corporation. Consult with accounting experts to make the most profitable decision for choosing a legal entity.
3.The Basis of accounting
There are two options in total — the cash method and the accrual method. We advise you to consult with experts to choose the most profitable one for tax deductions. What is the difference between these methods? The first involves the recognition of income upon receipt of payments and the deduction of expenses upon payment. The second method requires you to recognize income when you earn it and expenses when you incur them. There are more problems, but more order in the documents and profitability.
4.Expenses and supporting documents
They always need to be stored and documented in the ledger. Yes, expenses and owner-operators — from fuel to truck maintenance. And yes, all this needs to be fixed. Including:
- overnight stay;
- fare and parking.
Also, keep all bills, receipts, invoices, and trip logs. This will be needed for three years, so we advise you to think about storing documentation in advance.