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.
Thank you for your interest in the Partners in Business program!
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Excerpts from select chapters are available to view before you purchase by clicking the linked chapters in the Table of Contents below.
Chapter 1. Becoming an owner-operator
Take time to prepare for this big step.
Chapter 2. Selecting a business services provider
Picking this financial lifeline involves more than just tax-preparation concerns.
Build for the future with a strong owner-operator business plan.
Chapter 4. Bookkeeping
Tracking progress, filing income taxes and maximizing your bottom line.
Chapter 5. Profit and loss statement
How to interpret your monthly financial scorecard.
Chapter 6. Understanding your earnings
There’s more to revenue than pay per mile.
Chapter 7. Understanding costs
Fixed and variable costs affect your bottom line in different ways.
Follow these proven tips on planning your schedule to make more money.
Chapter 9. Controlling fuel costs
Your survival depends on minimizing fuel consumption and getting a fair surcharge.
Keep your No. 2 variable expenses to a minimum.
Chapter 11. Managing money
Learn the best practices for healthy cash flow, debt avoidance and identity protection.
Chapter 12. Income tax and other taxes
Good planning and record keeping help you keep tax bills low.
Chapter 13. Choosing a business structure
What legal form works best for your operation?
Chapter 14. Buying a truck vs. leasing
Determine your best method for acquiring a truck.
Chapter 15. Choosing a trailer
Spec’ing smartly can increase your profits.
Chapter 16. Financing your equipment
Keep your debt low and your credit rating high to land a loan with good terms.
Chapter 17. Maintaining your equipment
Routine PM will save money in the long run and help determine when to trade.
Chapter 18. Choosing a carrier
It’s expensive to switch carriers, so pick your partner carefully.
Chapter 19. Evaluating carrier compensation
Take time to weigh the numbers and find the deal that best suits you.
Chapter 20. Software, hardware and the Internet
Online trucking resources paired with the right computer help you work more efficiently.
It’s up to you to know and follow regulations and practice safe driving.
Chapter 22. Trucking insurance
Understand the types of coverage and what your operation requires.
Chapter 23. Health and income insurance
Paying for coverage of personal risks is a cost of doing business.
Chapter 23. Going independent
Getting your own carrier authority comes with risks and rewards.
Chapter 24. Saving for yourself
The habit of saving for personal goals will pay big dividends later.