Overdrive » Dollars & Sense

Dollars and Sense

admin — Wed, 01 Feb 2012 11:00:06 +0000

Extend drains with bypass filter

I’ve talked with thousands of owner-operators and many fleets about when they change their engine oil and why. The most common answers are 15,000 miles – and a blank stare. Often someone will add, “That’s the way we’ve always done it.”

Taking an oil sample and getting it analyzed is a key first step in extending drains. Engine makers’ service centers, as well as vendors such as Polaris Laboratories and Blackstone Labs, are good sources for doing the analysis. In some cases, results can be available online in less than a week.

There are only two explanations for changing at 15,000 miles or any other mileage interval: 1) The oil is no good and has already begun to damage the engine. 2) The oil isn’t broken down yet, so good oil is being thrown away. Neither situation makes sense. I believe most of the industry uses these random interval numbers simply because of a lack of knowledge.

If you are going to use some measurement to determine when to change the oil, it should be based on fuel consumed, not miles traveled. Fuel consumed gives a much better indication of how much wear and contamination the oil has been exposed to. A truck that gets 5 mpg puts the oil through more wear and contamination than a truck that gets 8 mpg in the same distance traveled.

The best way to know when engine oil needs to be changed is to take an oil sample, send it to a lab, and let the condition of the oil determine the interval. Doing this allows you to reap some or all of these benefits:

• Maximum usable life of the oil while protecting the engine.

• A reduction in operating costs by safely extending drain intervals.

• Confirmation of the oil’s quality.

• Collection of documentation for warranty claims.

• Identification of driver abuse or negligence, for multi-truck operators.

• Warning signs of engine- and systems-related problems that can’t be identified through normal maintenance.

To achieve maximum benefits from condition-based oil changes and a quality oil analysis program, you should combine them with bypass filtration. This is a secondary system that pulls a small amount of oil and filters it more slowly and thoroughly.

I discovered my first bypass filtration system in 1995 and was convinced that within five years every truck would have one. (It’s a good thing I don’t make predictions for a living!) More than 16 years later, engine manufacturers have only recently started to understand the benefits. Some new engine designs include bypass filtration.

Typical primary full-flow oil filters filter down to 30 to 50 microns. This allows some dirt, metal particles and contaminants to remain and damage engine components. The filters also do nothing to remove liquid contaminants such as coolant, fuel, water and condensation that also can cause damage. This is one reason so many operators change oil so often – even though the oil isn’t worn out, it’s simply too contaminated to do its job.

In contrast, a good quality bypass system can filter down to as low as 2 microns. The best systems include heating elements that can evaporate liquid contaminants and vent them during filtration. Once you install a bypass system, instead of changing your oil at 15,000 miles, you would change only the oil bypass filter and take an oil sample. The filter change and the sample interval are recommended by the bypass system manufacturer.

The system I use has a filter change and sample interval of 25,000 miles. The lab monitors the condition of the oil and recommends when the oil should be changed. It’s not unusual to go 150,000 to 200,000 miles between oil changes.

It’s not hard to see the potential cost savings. Instead of a $200 oil change service every 15,000 miles, you would spend $50 to $60 for a filter change and oil analysis every 25,000 miles. Instead of $1,600 per year in oil changes, you could spend $250 per year for filters and oil samples. It’s great for the environment, too, when you think of all the waste oil saved.

Kevin Rutherford is an accountant, small-fleet owner and the host of “Trucking Business & Beyond,” which airs on Sirius XM Radio’s Road Dog Trucking Radio. Contact Rutherford through his website, LetsTruck.com.

Dollars and Sense

admin — Sun, 01 Jan 2012 11:00:43 +0000

How to do a fuel-saving test

For more than 15 years I’ve been testing devices and strategies intended to improve fuel mileage. Though it can be labor-intensive, developing your own testing methods pays off.

If you plan well, control as many variables as possible, and keep accurate, detailed notes, you’ll save a lot of money and gain invaluable knowledge about your operation. There are many products to evaluate, such as wide single tires, aerodynamic add-ons and limited highway speed to 55 mph.

1. DETERMINE THE POTENTIAL FOR IMPROVEMENT. No matter what I’m considering, I start with the step I wrote about last month. That is, I determine if the product could improve the efficiency in any of the four areas that contribute most to fuel economy – aerodynamic drag, rolling resistance, mechanical resistance and engine thermal efficiency.

2. IDENTIFY THE KEY VARIABLES. One key part of fuel mileage testing is making sure you’re tracking fuel mileage accurately and consistently. Understand all of the variables that affect fuel economy, such as speed, weight, terrain, weather, fuel quality, road surface, traffic, idle time and mechanical conditions. I’ve identified more than 40 such variables.

Visit mygauges.com for Rutherford’s online tutorial that walks you through the process of keeping fuel mileage records and detailed notes for testing. You’ll also find resources for controlling fuel mileage variables, which is critical when testing fuel-saving devices.

3. SET A 30-DAY CONTROL PERIOD. I always run 60-day tests. I use a 30-day control, or baseline, prior to testing the device or strategy. This means I track the fuel mileage closely on the test truck for 30 days prior to the change and make sure that everything is consistent. If during the 30 days, for example, I developed a leaking charge air cooler, I would repair or replace it, then restart start the 30 days.

4. TEST THE DEVICE. Once I have a consistent 30-day timeframe of fuel mileage results, I add whatever device I’m testing. I track fuel mileage closely for the next 30 days. Once that data is complete, I compare it with the results from the control truck.

As with the first truck, be sure that nothing major changes during the actual test. For example, try to ensure you won’t need to replace tires during the testing procedure since new tires have much more rolling resistance.

In certain parts of the country, early winter testing wouldn’t be a good idea. Weather conditions could change drastically from the control test period. Fuel quality is changing as well due to winter blend fuels.

I have three trucks that run dedicated, so I’m able to control some of the major variables by testing with two vehicles. They run the same lane every day, most days within minutes of each other. I use the same strict control standards on the second truck, the difference being I don’t make any changes to that vehicle during the 60 days. That helps me account for some of the variables I can’t control, such as weather and traffic.

This testing procedure is intensive and time-consuming. But because I’ve stuck with it over the years, it’s allowed me to develop a deep understanding of what affects fuel economy and, most importantly, how to improve it.

Dollars and Sense

admin — Thu, 01 Dec 2011 11:00:02 +0000

Fuel and Physics

With all the fuel saving products in the marketplace, how do you know what works? There is no simple answer, but sorting through the hype ultimately comes down to physics.

Tread design and type of rubber compound account for 40 percent of a tire’s rolling resistance.

For a fuel mileage device or strategy to improve fuel economy, it has to have a positive impact on one of the following factors. If you’re unable to determine that, check for third-party independent testing. You also might get opinions from customers who have used the product successfully.

Aerodynamic drag is the top factor affecting how much fuel your truck uses at highway speeds. The easiest way to reduce drag is to slow down. Every 1 mph you slow down equates to 1⁄10 a mile per gallon improvement. Just slowing down also will positively affect the next two factors on this list, as well.

Fuel economy can vary widely between classic and aerodynamic designs. At 65 mph, the difference can be 1 mile per gallon. That could equal a $10,000 yearly savings for the aerodynamic truck. The next time you’re buying a truck, think twice before choosing a square nose.

Rolling resistance comes primarily from tires. Roughly 60 percent of the rolling resistance in any tire comes from sidewall design, the remaining 40 percent from tread design and the rubber compound. Choosing a tire with lower rolling resistance could improve fuel mileage by as much as half a mile per gallon.

Tire position also can affect rolling resistance. Trailer tires have the greatest impact, followed by drive tires and then steer tires. Wheel alignment and tire balance can also affect rolling resistance.

If your rig isn’t as aerodynamic as it could be, see if improvements such as rounded mirrors or a trailer gap reducer would lower air resistance. For more ideas about aerodynamics and objective estimates of fuel savings, visit the U.S. Environmental Agency’s SmartWay website, epa.gov/smartway, and search for “truck aerodynamics.”

The lower the tire’s rolling resistance number, the better the fuel economy. You can get an idea of these ratings and their relationship to fuel savings by looking at Michelin’s online calculator that compares any tire to a Michelin replacement. Visit michelintruck.com, search “fuel savings calculator,” click first result, then “Rolling Resistance Comparison” on the left.

Mechanical resistance is in play in your driveline. Roughly 15 percent of available horsepower is lost through the transmission, driveshaft, U-joints, carrier bearings, differentials, power divider and wheel bearings. Reduce mechanical resistance and you’ll increase horsepower at the wheels and improve fuel economy.

Oil is one factor in this. For any driveline component, choose the lightest synthetic oil approved for use. Direct drive transmissions also have lower mechanical resistance than overdrive transmissions. Also choose the smallest, lightest wheel and tire assembly. Have your truck inspected and measured for correct driveline angles.

Thermal efficiency is a measure of your engine’s ability to convert fuel to horsepower. Before making any modifications to your engine, ensure:

• Valves are properly set;

• Intake and charge air cooler system is free of leaks;

• All air, fuel and oil filters are clean and of the proper micron size for your engine.

Use high-flow air filters, high-flow exhaust components and synthetic oils. ECM settings can be tweaked and tuned to improve engine performance and fuel economy as well.

Next month: Tips on how to test fuel mileage products on your own.

Dollars and Sense

admin — Tue, 01 Nov 2011 11:00:58 +0000

Choosing a business form

There are three main things to consider when you choose a legal form for a business: asset protection, taxation and simplicity. Each business form has advantages and tradeoffs in those areas.

The majority of owner-operators are sole proprietorships, as are 80 percent of businesses in the United States. A sole proprietorship requires no formal setup. It begins when you start earning money.

Tax requirements are simple for a sole proprietorship, the most common form of an owner-operator business.

In the eyes of the law, the owner of a sole proprietorship is the business. Debt incurred by the business is the responsibility of the owner. If your business gets into financial trouble, creditors can seize everything you own, including your house and other personal possessions. If you have an accident while driving and injure someone, the injured party can collect your business assets and your personal assets.

Sole proprietorship is great for owner-operators starting out. Taxes are fairly simple. You file IRS Schedule C, which details your business income and expenses, along with a 1040. If you operate more than one business, or if you file jointly with your spouse and she owns a business, you have to file only a Schedule C for each business. In addition, because there’s no employer to withhold Social Security taxes, a sole proprietor simply pays his own taxes quarterly.

A partnership is similar to a sole proprietorship, except it is owned by more than one person. The partnership isn’t taxed as a collective entity. The individual partners are taxed, and they file individual income tax returns.

A handshake or verbal agreement is all you need to establish a legally binding partnership. The partners are the business, so in case of legal or financial judgments, injured parties or creditors can come after the personal assets of the partners. Partners, however, should write an agreement that stipulates the role of each partner, as well as distribution of profit and loss. The agreement also should spell out a formal method for resolving conflict, such as naming an arbitrator.

A partnership has no life beyond the death of a partner. Unless there is a formal partnership agreement, the state decides distribution of assets.

A corporation is treated separately from its owners, shareholders and employees. Incorporation laws differ from state to state, and the cost of incorporating varies from a few hundred to a few thousand dollars. In addition to setup costs, incorporation requires forms, records and formal annual meetings.

Because each state treats limited liability companies differently, trucking LLCs can encounter problems. If you have an Ohio LLC, for example, and you have an accident in New York, your liability could be at risk.

To set up a C corporation, you must file articles of incorporation with your state. Although do-it-yourself kits for incorporating are available, it’s best to hire an attorney to avoid mistakes and to address your state’s laws. C corporations are notorious for double taxation, which means the corporation is taxed, and the owners are taxed on their dividends and salary.

The S corporation, however, offers the limited liability of a C corporation without double taxation. The owners or shareholders are taxed only on personal income, as in a partnership or sole proprietorship. In addition, the net income of an S corporation is available for distribution among the shareholders as dividends.

A limited liability company offers benefits similar to those of an S corporation, but without the membership limitations. Like an S corporation, an LLC offers liability protection for the owners and profits pass through the owner’s personal income tax returns. This means no double taxation. Although LLCs are becoming more popular, be sure you fully understand their ramifications before you choose this business form.

When you ask lawyers or CPAs about the best form of business, you’ll get different answers. Before you make that decision, have your accountant run the numbers on each option and compare them based on your income as a sole proprietor.

Dollars and Sense

admin — Sat, 01 Oct 2011 11:00:52 +0000

Taking the per diem deduction

Kevin Rutherford

What exactly is per diem? It’s Latin for “per day.” It usually refers to the daily rate of any payment. It also may refer to a specific amount of money that an organization allows an individual to spend per day to cover work-related living and travel expenses, such as meals.

The per diem deduction primarily compensates you for the cost of meals on the road.

In trucking, there are two separate per diem uses. You can get paid per diem from your employer, or you can deduct per diem on your tax return. As an owner-operator, you will never be paid per diem. But while the rules for deducting per diem are the same for both owner-operators and employee drivers, the method for deducting them on your tax return is different.

Knowing the per diem basics will help you navigate the tax labyrinth. Don’t be afraid to get a tax second opinion before filing.

To qualify for a per diem deduction, you must be traveling away from home long enough to be required to sleep away from home. If you take a short trip that doesn’t show any off-duty or sleeper-berth time on your logs, that trip does not qualify for per diem. Log books are always proof of per diem deductions.

To claim the deduction, you need to know how many days you traveled away from home for the entire year. Go through your log books and tally up the days. Count days you leave for a trip and days you return from a trip as three-fourths days. So if you leave on Monday and return on Friday, you would qualify for 4 1/2 days of per diem that week. Then multiply the total by the current IRS per diem allowance, which is $59 per day. (Note that days spent in Canada qualify for $65 per diem.) If you traveled 245 days during 2011, your total per diem is $14,455 ($59 x 245). That amount will be adjusted on your federal tax return for the allowable percentage (80 percent), which brings it to $11,564.

Owner-operators will report this deduction on Schedule C, which is devoted to business income and loss. The final amount reduces your income, dollar for dollar. If you’re in the 15 percent tax bracket, it reduces your income taxes by $1,735 ($11,564 x 0.15). It also reduces your self-employment taxes.

Keep receipts or not?

The idea behind per diem is to reduce accounting and paperwork for both the business owner and the Internal Revenue Service. You are able to claim the per diem deduction without keeping any receipts for the items that per diem includes, namely meals, beverages and tips.

Since laundry costs are not presently considered a per diem expense, you can track your costs and receive a tax benefit.

Over the years, the IRS has gone back and forth on whether the per diem includes laundry costs while traveling. As of now, laundry is not included in the per diem deduction, so keep all receipts for laundry expenses and deduct those separately.

Many times you will be using coin-operated laundry machines and there won’t be a receipt. You are allowed to deduct travel expenses under $75 without a receipt if you keep track of them, so do that with laundry machines. Pick up an expense ledger from an office supply store, or just use a spiral notebook. Record the date, a description of the expenditure, and its cost.

Dollars and Sense

Brooke Wisdom — Thu, 01 Sep 2011 11:00:11 +0000

2 trucks, 20 new costs

Many of the large fleets you pass on the road started just like you – a one-truck operation. But owning a business is risky and isn’t for everyone. Adding trucks, hiring drivers and managing a small fleet are tremendous undertakings. If you follow a plan, it can be very rewarding. It’s important to invest time in two areas.

Know your operation

You shouldn’t add even one truck and driver unless you have at least one full year of accounting data – a profit and loss statement – and a budget on your current truck. Not only does that make sure you are running a solid operation now, but it also becomes the blueprint for your next truck.

Use your P&L statement to forecast profitability on any truck you add. The crucial part is costs. First, add the driver’s wage. Then realize the trucks you add with drivers will never be as profitable as the truck you drive. Fuel mileage won’t be as good. Maintenance costs will be higher. You can expect more downtime. Finding and hiring drivers will bring additional costs.

Finally, you have payroll costs and taxes, such as state and federal unemployment and worker’s compensation insurance. To get around taxes, some owner-operators try to pay drivers as independent contractors, but that creates a risk of serious tax disputes with the IRS and the state. If you own the truck, your drivers are employees by law. If you can’t afford to pay the costs, you can’t afford to expand your business.

As you do the math, don’t be surprised if there is little or no profit left over. Many fleets operate on a margin of just pennies per mile after expenses. Learn how to run one truck profitably before attempting to expand, and know your numbers inside and out.

Get a quality driver

If you really want to be successful, don’t cut corners or try to save money when it comes to drivers. You get what you pay for.

You have to offer something the other carriers don’t. Check out average driver wages in your area or freight segment and then pay 5 percent to 10 percent more. That certainly cuts into your profitability in the short term, but hiring and retaining good drivers will be the key to success as you grow. This is why you have to excel at controlling costs in other areas.

To find drivers, cast a wide net. I normally take out ads in a few large newspapers. I don’t advertise in trade magazines or websites, though, because my small ad would be lost among those of large carriers with huge ad budgets.

The drivers you hire will make or break your operation. Solicit a large number of applicants, interview them thoroughly and check references.

I can usually generate 50 to 75 phone calls with well-placed, well-written ads. From those, I have a phone interview ready and usually whittle the applicants to 10.

I schedule in-person interviews with the 10, looking to find three potential hires because I like to have backup candidates. Many times your first choice won’t work out and you don’t want to have to start the process over from the beginning.

Beware the horse before the cart

One of the biggest mistakes I see owner-operators make is adding a truck because they have a driver.

A friend or a cousin says, “If you buy a truck, I’ll drive it for you.” This is never a legitimate reason to expand your business. Nine times out of 10, that driver will not be with you in six months.

You are a business owner, not the State Employment Service. Don’t even consider hiring your cousin unless you were already prepared to expand. And then screen him as ruthlessly as you would any other applicant.

Dollars and Sense

admin — Fri, 05 Aug 2011 19:23:59 +0000

3 keys to expansion

My recent columns have been helping you get ready to grow beyond one truck. Now, with clear objectives, let’s create your plan with the end in mind.

When pursuing their own operating authority, most people focus on the paperwork and other details of obtaining that legal status. That can be obtained easily through service providers.

Instead, focus on the business model and the day-to-day operations of your trucking company in three major areas.

SOLICIT FREIGHT FROM LOCAL SHIPPERS. To find quality freight, I would recommend against running strictly off of load boards. Otherwise, you will work harder, take more risk and ultimately make less net revenue than you did being leased to a quality carrier. Consider lining up freight directly from shippers in your area. This isn’t easy. A spouse or a partner who can run your sales side is a huge help.

If not, create strong relationships with a couple of key, proven freight brokers in the lanes you want to run. You can also use a broker to work as your sales agent in a certain area.

Specializing in a freight niche, too, might help you bypass competition with the big carriers by finding freight they don’t handle well, such as items that need special attention or special skills. Ask every shipper you meet about the most difficult load. Develop ways to make that load easier.

STAY ON TOP OF COMPLIANCE. If you get your authority, you have two options for managing compliance: 1) Go it alone or 2) pay a service to do it. I’ve found that most service fees are very reasonable and save time.

Handling compliance is often heavy with paperwork and involves several government agencies. If you attempt it on your own, you may miss a critical step in the process. Many companies that will handle start-up compliance can also help maintain it. The issues include:

• Authority

• Registration

• IFTA

• Permits

• Log validation

• Drug testing

• FMCSA

Consider joining associations that can help with this and other services, such as the Owner-Operator Independent Drivers Association, the National Association of Small Trucking Companies, the Truckload Carriers Association or your state trucking association.

MANAGE CASH FLOW CAREFULLY. You may be accustomed to a weekly settlement check from your carrier. Running a business is quite a bit more difficult when money arrives sporadically, and occasionally not at all. Many new trucking companies turn to factoring their freight bills to help with cash flow. It seems like such an easy answer – you give them freight bills, they give you cash, minus a fee.

There are two types of factoring: recourse (if the customer doesn’t pay, you must buy back the invoice) or non-recourse (you sell the invoice for a lower price and are not held responsible for customer non-payment). Recourse fees typically range from 2 percent to 5 percent; non-recourse from 5 percent to 10 percent.

Here is where many get confused. You might pay pay 8 percent yearly for a truck loan or 18 percent yearly for a credit card. But don’t assume that an annual rate is comparable to a factoring fee, which is stated as a one-time fee or, if the collection drags out, on a monthly basis.

Many freight factoring companies will help in other ways, such as credit checks and collections, so your fees can yield more than just quick cash. Do your homework when it comes to factoring costs and, again, strive for quality freight, which should minimize the need for factoring.

Dollars and Sense

Brooke Wisdom — Fri, 01 Jul 2011 11:00:10 +0000

Sharpen your saw, then expand

Every business owner thinks about expansion at one time or another. As an owner-operator, you have two options: If you are leased to a carrier, you can get your own authority and your own customers, possibly adding trucks and drivers. Or you can remain leased and still expand by adding trucks and drivers.

Either way, take advantage of resources that will help you develop great business skills. I’ve found these two books most helpful in this transition.

“Strengths Finder 2.0,” by Tom Rath, will guide you through discovering your strengths and weaknesses. Purchase of the book includes a code that enables you to take an online test to analyze your pluses and minuses. For example, some people are great at details and organization; others are more creative and focused on the big picture. Some people are great at customer service and interaction with other people. Some are great with their hands and prefer to work alone.

Know your goal before taking the first steps to reach it. If you’re expanding your business, don’t start looking for new equipment until you have determined which market you'll serve.

All those traits are useful in an expanding owner-operator business. You probably have some of them, but can you develop others? Do you have a spouse or other partner to complement your skills? Can you afford to pay professionals to fill in where you lack?

The number one lesson I took take away from Rath’s book was that we spend too much time focusing on our weaknesses, rather than trying to capitalize on our strengths. I learned how to focus on the areas where I can be the most effective. I used to struggle with details and paperwork. I always thought that I just needed to buckle down and get better at it. I finally realized it was much more effective to pay somebody to do the accounting data entry. My strength was in analyzing the numbers and then creating solutions to improve the business.

The other book is the classic “Seven Habits of Highly Effective People,” by Stephen Covey. I’m outlining the habits here, but don’t skip the book. The details are necessary to really drive home the lessons.

1. Be proactive. It means you are taking the initiative. You are not living reactively, but are taking a proactive stance in your life. No more blaming your dispatcher or your mechanic for problems.

2. Begin with the end in mind. Effectiveness is not just a matter of reaching a goal, but of achieving the right goal. You won’t get there unless you get started with sensible steps. Don’t waste time looking at tandem axle sleepers when you really want to create a local cartage company.

3. Do first things first. This means to focus on your priorities. If you are planning on getting your own authority, it is much more effective to make sales calls to potential customers than it is to spend six hours reading trucking forum complaints about brokers.

4. Think win-win. In personal or business relationships, resolve problems with a mindset that benefits both sides. This is also the cornerstone of good negotiation skills, which are critical to the new relationships that develop as you expand your owner-operator business.

5. Seek first to understand, then to be understood. To develop win-win relationships, find out what winning means to the other parties.

6. Synergize. Foster relationships that add to your effectiveness. For example, for a particular load your customer needs a specialized trailer that you don’t have. Create contacts you can refer work to and add value for your customer.

7. Sharpen the saw. There’s an old story about a man sawing a log. The more he saws, the less he cuts. A passerby suggests he take a break to sharpen the saw. The man says he can’t stop to sharpen the saw because he is too busy sawing. Highly effective people take the time they need to sharpen their professional and personal tools, knowing it pays dividends in the long run.

NEXT MONTH

We’ll get down to the details of how to expand your trucking business.

Dollars and Sense

Brooke Wisdom — Thu, 02 Jun 2011 16:16:57 +0000

Diamonds in your cab

I’ve often shared the story about acres of diamonds, popularized by Russell Conwell, founder of Temple University, in the late 1800s. It’s about a man so obsessed with finding diamonds that he sold his property and began searching throughout his country. He never discovered diamonds, but later the new owner of his former property discovered acres of diamonds on that property.

When I heard the story for the first time, I was a young, inexperienced owner-operator struggling just to pay the bills. I needed information to run my business and had convinced myself that because I hadn’t gone to college, I didn’t have the knowledge to be successful.

Then, while I was driving one day, a huge irony hit me. It was my acres of diamonds: My job allowed me as much as 12 hours a day to learn via audio materials. I started collecting audio books, seminars and speeches. You name it, I listened to it. I also bought an inexpensive recorder so that I could “write” notes to myself while driving. I continue to use my driving time the same way. I just wish I had more of it.

If you begin learning while you are driving, it will change your life for the better. For starters, I recommend these five books, available on audiobook downloads from audible.com.

Who Moved My Cheese? SKILL: Adapting to change. SUMMARY: Spencer Johnson reveals truths about how people can succeed in changing times. The book is an enlightening story of four characters who live in a maze and look for cheese to nourish them and make them happy.

People Are Idiots and I Can Prove It! SKILL: How to succeed in everything. SUMMARY: Larry Winget discusses what he calls “life’s messes” and offers sound, simple solutions. He addresses business, family, health, being fat, being stupid, success and money and offers ways for people to turn their lives around.

The Fred Factor. SKILL: Providing excellent customer service. SUMMARY: Mark Sanborn illuminates simple steps that can transform our lives. He reveals four basic principles to help bring fresh energy and creativity to our life and work.

The World is Flat. SKILL: How to understand the world economy. SUMMARY: Economist Thomas Freidman examines the factors shaping business and competition in a technology-driven economy. He uses case studies, interviews and statistics to illustrate problems and possible solutions. This isn’t the boring economics you had in high school.

Atlas Shrugged. SKILL: Learning the nature of true capitalism. SUMMARY: Ayn Rand’s lengthy, classic novel presents a defense of free enterprise when it’s threatened by big government. It’s quite relevant today and might inspire you to succeed in a competitive industry. n

Peer review

A group on my website is dedicated to reviewing and sharing information on audio books. It’s a great forum for getting ideas. Go to LetsTruck.com and search for “Audible truckers for further knowledge.”

Dollars and Sense

Brooke Wisdom — Sun, 01 May 2011 11:00:02 +0000

Simplify your record keeping

If you missed the deadline for filing your tax return, it’s probably for one of two reasons: You don’t have the money to pay the tax or you don’t have a system that allows you to easily gather the information needed to complete your return. Address the second, and you’ll get closer to fixing the first.

The owner-operator bookkeeping system I’ve developed is as simple as one can be and generates the best reports possible.

I run my small trucking business with just three reports. A monthly business report shows income and expense broken down by category. It also shows income per mile, cost per mile and each expense as a percentage of revenue. It tells me exactly what is going on in my business and, more importantly, how to improve it.

The other reports are a standard profit and loss statement (P&L) and a year-end tax report for your tax preparer.

A simple process for gathering and organizing your paper receipts, combined with an online software tool, will allow you to input your data with the least amount of effort and create the reports:

• Go to an office supply store and pick up a 21-pocket expanding folder, labels for the folders, a stapler and a desktop calculator with a register tape.

Fill out the pocket labels with the categories listed on this page. Some will not apply if you don’t employ another driver or have space devoted to an office or shop. Every category must be business-related. For example, car expenses apply only to business-related trips, such as to your truck dealer.

• When you get a receipt, drop it in the corresponding pocket. Fuel, settlements – any cost or revenue document should have a place to be filed.

• At the end of each month, schedule two hours to do your accounting. You will soon find you can get this done in less time.

• Add the receipts in the folder’s first pocket. Staple the register tape to the corresponding pile of receipts and drop them back in the same slot. Since they are stapled, they won’t get mixed with new receipts. Do the same for the remaining categories.

• Supplement this system by starting to write down your odometer reading on the first of every month. This allows you to track total monthly miles and then calculate your true income per mile and all of your costs per mile.

• Use the online software I have created for this system. You can find it at mygauges.com. Log into the system and make one entry for each of your categories, and then enter the data from your settlements. The system does the rest, creating the reports I described earlier.

I will be hosting webinars on this topic for those who’d like to learn more about the process. Sign up for my newsletter at letstruck.com for the details.

You can skip the computer

If you’d prefer a paper-based record-keeping system, you can still generate the same key reports:

• Make a ledger entry with the months across the top row and a category list down the left.

Scale fee receipts are among expenses that should be filed for income tax purposes.

• As you total each category, write the amount in the corresponding ledger space. If you are proficient with spreadsheets, you could create your own reports from the data. If not, your accountant can use the ledger to create the reports for you.

• Divide each category total by miles for the month to create your cost-per-mile for the category. This can be recorded in a dual column for each category or on a separate ledger sheet.

Expense categories

• Car expense

• Fees & commissions

• Insurance

• Interest paid

• Legal & accounting

• Office supplies

• Rent or lease

• Repairs & maintenance

• Non-office supplies

• Taxes & license

• Travel

• Meals & entertainment

• Utilities

• Wages & payroll

• Fuel, oil & additives

• Scale fees

• Tolls & parking

• Load & Unload

• Physicals & drug testing

• Uniforms & laundry

• Settlements