To deduct this expense, record the cost of the car, the date you started using it for business, and the total miles for the year. For each business trip, such as to the bank, record the date, mileage, destination and purpose. This information can be kept in a notebook you carry in the vehicle so that you can have it ready for your business services provider at the end of the year.
Try to find a credit card without an annual fee and with a low interest rate. If possible, pay the balance in full every month. Having a business credit card may help you reduce the amount of advances you take from your carrier and will make it easier to keep track of business expenses.
Your log books are your best record of your per diem (daily) expenses, primarily meals, so be sure to keep it in a safe place along with your receipts and tax returns. You may need your logs to prove your expenses, should you be audited.
All of your records should be converted into a profit and loss statement at the end of every month. The statement should show how many miles you drove, what your revenue was, what your costs were and how much money you made or lost during the month. You can compare month to month to see if you are improving. If you cannot produce the statement, work with a financial services provider who can do so.
Why “tip” the taxman? Place an envelope in your truck for collecting your receipts and send them at the end of each month to your business services provider, who can then provide you with a monthly profit and loss statement as well as accurate quarterly tax estimates. Your financial services provider will tell you if something is not tax-deductible.
This notebook will be used to record those expenses for which you cannot obtain a receipt, such as when you wash your truck at a coin-operated facility or personal use of your auto, so you can deduct the expenses at tax time. Forward this record to your business services provider monthly with your other receipts. You must track the date, location, amount and reason for each expense in your log in order to meet IRS regulations.
If you are the sole owner of the business, open an additional personal account and save yourself the extra fees associated with business accounts. Deposit your settlement checks in this account and pay yourself for driving from these funds. A separate account will also give you easy access to all of the information needed in case you are ever audited.
Without knowledge of your revenue and expenses you can only guess at how your business will perform. Accumulate three to four months of information to properly reflect your spending habits. Don’t forget to budget for savings, estimated taxes, unexpected situations and lean times.
Succeeding as an owner-operator is all about business. It’s about how to handle the rising costs of equipment, fuel and insurance when there is no corresponding increase in revenue. It’s about tracking costs and keeping good records so you can change your operation before it’s too late. It’s about looking at the big picture and setting goals so that your hard work gets you where you want to go.
Because you are constantly on the road, it’s difficult to get professional consultation when you need it. That’s where Partners in Business comes in. The information, advice and resources listed here are for both owner-operators who are just getting started and seasoned independents who want to reinforce their business skills.
This manual, which has undergone many revisions and additions since its last edition, is something you can refer to whenever you have a question about managing your operation, whether it’s buying your first truck or planning for retirement. The forms throughout the manual will help you get a handle on many key areas.
If you’re new to trucking, do plenty of research before plunging into the owner-operator world. It’s a good idea to work as a company driver for at least a year. Once you get into it, you’ll find that there’s much more to owning and operating a trucking business than just earning a commercial driver’s license and making a truck payment.
At the same time, a well-run owner-operator business can be a profitable, enjoyable enterprise. We hope this information will help you achieve that experience.
Overdrive Editorial Director