Finding a Financial Adviser

| December 12, 2008

A professional who knows the trucking industry can help you organize your paperwork, take advantage of tax deductions and give you key advice throughout the year.

Selecting a professional to help you with your finances isn’t as easy as flipping through the phone book. There are several kinds of financial professionals, and one of them should fit your needs:

CPA. Not every owner-operator business needs a Certified Public Accountant. Because CPAs have extensive training, they are more expensive than basic accountants.

ENROLLED AGENT. An enrolled agent (sometimes referred to as an EA) is a half-step below a CPA. Enrolled agent is a designation of the Internal Revenue Service. To achieve this designation, the agent is required to pass a two-day examination on taxes administered by the IRS. In addition, the agent must take a minimum of 24 hours of continuing tax education each year. Many EAs are former IRS employees. CPAs and EAs are qualified to represent a taxpayer in an audit or in court without the taxpayer being present. An EA generally charges less than a CPA or a tax attorney.

STOREFRONT PREPARER. Commercial tax-preparation services, such as H&R Block, prepare mostly personal tax returns and are very conservative about the deductions they will let you claim. They usually are not well-versed in trucking-related aspects of the tax code, so they might neglect legal ways to cut your tax bill. In addition, they are tax preparers only and cannot give you year-round tax-planning advice.

ACCOUNTANT. Using a full-time accounting service familiar with trucking is the most common practice for accounting and tax preparation in the trucking industry.

Know that a good accountant isn’t cheap. Expect to pay $100 to $200 for an initial consultation and $50 to $150 a month. If you gross $80,000 per year and pay $1,000 for accounting services, that amounts to only 1.2 percent of your total gross. If you run 100,000 miles per year, it’s only a penny per mile. A good financial adviser can easily pay for his services with the money he saves you, and a good accountant will provide you with monthly and quarterly reports, which include profit-and-loss statements and balance sheets.

More than that, your accountant should be able to help you:

  • Develop a business plan.

  • Determine which business structure is best for you.
  • Set up your business books.
  • Manage your cash flow.
  • Prepare periodic business assessments.
  • Determine when to upgrade your equipment.
  • Analyze the tax consequences of business decisions.
  • Maximize your tax deductions.
  • Select computer software.
  • Choose an investment adviser.
  • Establish a retirement program.
  • Develop an estate plan.

You don’t necessarily need an accountant who specializes in trucking, but it’s better if he has trucking experience. Not every accountant is familiar with the tax deductions that a trucker is allowed. If you find an accountant you like who doesn’t have trucking experience, plan to spend time explaining what you do and what kinds of reports you need. If you can’t find an accountant who’s experienced in trucking, at least find one who caters to small service businesses.

Start your search by asking for referrals from other successful owner-operators. Many accountants advertise in Overdrive and other trucking publications.

When you talk to an adviser, make sure you ask: Do you offer a free in-person consultation? What is your fee? Do you charge by the hour or by the month? What services does your fee include? Can I call you any time with questions?

Because you are on the road so much, the answer to the last question is especially important. You need to be able to call your accountant from time to time without incurring a great deal of cost. Find out whether he allows unlimited calls for a set rate or charges for each call after a certain number.

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