One of the most significant things that successful owner-operators should take advantage of is bookkeeping. Income tax reporting and minimization, warranty concerns, maintenance information, and monthly profitability are just a few of the areas where receipts and records are kept.
The better organized and detailed your receipt collection is, the better (whether you hire a business services provider or not). You can make trucking bookkeeping easier by following six simple steps that will result in more earnings with less effort.
For truckers, here are six basic bookkeeping tips
- Keep every receipt, no matter how minor the transaction appears to be.
What’s the point of “tipping” the taxman? You want to be able to deduct as many reasonable expenses as possible from your taxes. Keep a receipt envelope in your van, or save e-receipts to dedicated folders on your computer or on the cloud. Monthly profit-and-loss statements, as well as correct quarterly tax predictions, should be filed in the folders.
Scanned photos of receipts are acceptable but save original paper copies of any large-ticket purchases for warranty purposes.
- Create a second company checking account.
If you’re the only proprietor of your company, open a second personal account for convenience’s sake, as well as to avoid the extra fees that come with business accounts. Pay yourself out of these funds after depositing settlement cheques into this account. For ease of accounting and bookkeeping, pay all business expenses from this account. In the event that you are audited, having a separate account will offer you convenient access to the required information.
- Keep your business expenses on a different credit card.
Find a credit card with a low-interest rate, no annual fee, and, ideally, a significant rewards program by doing some research. To avoid accruing more business debt, pay the balance in full every month. Another approach to make trucking bookkeeping easier is to use a credit card for company costs. You can usually segregate charges into categories using a credit card (gas, food, maintenance, etc.).
- Keep a copy of all of your logbooks.
Your greatest proof of eligibility to per diem expenditures is your logbook and/or electronic log records (primarily composed of meal costs). Make sure you can save and access your history if you rely only on your electronic logging device (ELD) (this is a mandatory thing to know for inspections anyway).
- Keep a notebook in your truck with you at all times.
To record any expenses for which you do not have a receipt, use this notebook (in addition to your receipt envelop!) or a document on your computer or smartphone. This covers things like washing your truck at a coin-operated facility and recording mileage for personal usage of your vehicle for business purposes. Send a monthly record, along with any other receipts, to your business services provider or tax accountant.
To comply with IRS standards, you must keep note of the date, location, amount, and justification for each expense.
- Make a backup of your documents.
You must keep all records used to prepare your tax return for three years from the date you filed the return. You should also keep all IRS quarterly estimated tax payments, monthly profit and loss statements, insurance documentation, maintenance records, warranty information (which should be available immediately to keep your truck on the road), registration information, settlement statements and bank statements, business credit card statements, and canceled checks.
How to Make Bookkeeping Easier
Business services can assist you in organising and reporting your income, expenses, profit and loss statements, and taxes. However, if you’re an owner-operator who wishes to operate your firm on your own, you’ll need a reliable system to keep recordkeeping as simple as possible.
Here’s an example of a very basic owner-operator recordkeeping system
- An office supply business can provide you with an expanding file folder, stapler, and calculator with register tape. Fill in the many types of expenses and incomes on the growing file folder’s pocket labels. Such as maintenance, fuel, meals and entertainment, equipment, settlements, and office supplies.
- Drop a receipt or settlement statement into the appropriate pocket when you obtain one.
- Add the receipts in each pocket at the end of each month. Label the month and year on the calculator’s register tape, then staple the printout to each appropriate stack of receipts and place the bundle back into the corresponding slot. Because they’re stapled together, they won’t get mixed up with new receipts. You’ll have everything you need sorted and ready to go at the end of each quarter or year.
- Supplement this system by noting your odometer reading on the first of every month. Allowing you to track your true cost per mile for each month. Better yet, record your odometer reading each time you start a new load so you know your cost per mile for each load!
- Create a monthly entry for each category and submit your settlement data using online software. Create reports and manage your business with the help of M7 Tax experts.