11 Bookkeeping Tips for Truckers: The Basics
The more organized and thorough you can be in your receipt gathering, the better – whether you hire a business services provider or not. You can simplify the bookkeeping for your trucking company by following these 11 simple practices that will translate into higher profit with less hassle.
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1. Save every receipt, no matter how insignificant the charge seems.
Why “tip” the taxman? You want to be able to deduct as many legitimate costs as possible. Keep an envelope in your truck for collecting receipts, or use the dedicated folders on your computer or in a cloud for e-receipts. Use the folders for your monthly profit-and-loss statements and accurate quarterly tax estimates.
Scanned images of receipts are acceptable, but keep original paper copies for warranty purposes for any big-ticket items you purchase.
2. Open a separate checking account for your business.
If you are the sole owner of the business, open an additional personal account for simplicity purposes, not to mention that it will save you the extra fees associated with business accounts. Deposit settlement checks into this account, and then pay yourself out of these funds. Pay all business expenses from this account for easy recordkeeping purposes.
Having a separate account will also give you easy access to necessary information if you are audited.
3. Use a separate credit card for business expenses.
Research credit cards and find one with a low-interest rate that doesn’t have an annual fee and, ideally, a generous rewards plan. Pay the balance in full every month to ensure you aren’t racking up additional business debt. Having a credit card for operating expenses is another way to make recordkeeping easy since you can often separate charges into categories (gas, food, maintenance, etc.).
4. Save all of your logbooks.
Your logbook and/or electronic log records are your best proof of entitlement to per diem expenses (primarily composed of meal costs). If you rely solely on your electronic logging device (ELD) for bookkeeping for truck drivers, make sure you can save and access your history. This is a mandatory thing to know for inspections anyway.
5. Keep a notebook in your truck.
Use this notebook (in addition to your receipt envelope) or a document on your computer or smartphone to record any expenses you cannot obtain a receipt for. This includes things like when you wash your truck at a coin-operated facility or need to record mileage for business use of your personal vehicle. Provide a monthly record to your business services provider or tax accountant and any other receipts.
For accurate bookkeeping for truckers, you must track the date, location, amount, and reason for each expense to meet IRS regulations!
6. Save your records.
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 and bank statements, trucking business credit card statements, and canceled checks.
7. Use an accounting system.
Trucking bookkeeping is easier if you use consistent accounting systems and practices. Most trucking businesses use either a cash-based or accrual-based accounting method.
With cash-based accounting, you only count any money you get paid when you receive it. Likewise, expenses are incurred when you pay bills. This is the simplest system to make sure you keep track of everything.
With an accrual system, you recognize revenue when it’s earned (before it’s paid) and bills when received (before they are paid). Then, you reconcile accounts each month to ensure they sync up.
8. Update your books daily.
By updating your books daily, you will have a better idea of how your business is doing and be able to manage your cash flow more easily. The easiest way is to enter your expenses daily as you incur them. That way, you aren’t relying on your memory. Plus, if you do lose a receipt, you will still have the record in your files.
9. Review your money frequently.
Electronic invoicing and payments make sending and paying bills and getting paid simpler and faster. You no longer have to wait for a physical check to cash. Keep an eye on the money going in and out of your bank account to ensure you are getting paid what you’re owed.
Check expenses to your bank accounts to make sure they are legitimate expenses, especially if you’re not the only one with access to the account.
If there is a discrepancy, you want to catch it quickly before it becomes a bigger problem for your trucking business.
10. Do a month-end close.
A best practice for bookkeeping for truckers is to make sure you close out each month by making sure you have all of your documentation, it matches your records, and you can tie revenue and expenses accurately to the balance at the end of the month.
11. Make sure your books are audit-proof.
One out of every 25 owner-operators gets audited by the IRS for taxes each year. States have audits, too. You want to avoid that happening to you, but you want assurances that you’ve done everything right if it does.
Truckers should maintain separate accounts for personal and business expenses to make it easier to track and prove a clear separation between personal and business expenses. During the year, you’ll want to save every receipt.
If you avoid an audit, that’s great! If not, you will be happy you took the time to keep your records in order.
How to simplify your recordkeeping
Business services can help significantly with the organization and reporting of your owner-operator income, expenses, profit and loss reports, and taxes. But if you’re an owner-operator who wants to manage the business yourself, you need a surefire system to keep recordkeeping as simple as possible.
Here is an example of a very straightforward recordkeeping system for an owner-operator.
Purchase an expanding file folder.
Purchase an expanding file folder, a stapler, and a desktop calculator with register tape from an office supply store. Fill out the pocket labels on the expanding file folder with various categories of expenses and incomes — things like maintenance, fuel, meals and entertainment, equipment, settlements, and office supplies.
Drop it in the corresponding pocket when you get a receipt or settlement statement.
This makes it easier to keep track of things when it’s time to total everything up.
At the end of each month, add up the receipts in each pocket.
Label the calculator’s register tape with the month and year, staple the printout to each corresponding stack of receipts, then drop the bundle back into the corresponding slot. Since they are stapled together, they won’t get mixed up with new receipts coming in. You’ll have everything you need already sorted correctly for the end of each quarter or at the end of each year.
Note your odometer reading on the first of every month.
This allows 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!
Use a TMS to help with bookkeeping.
Trucking bookkeeping doesn’t have to be complicated. Trucking management software (TMS) can help you keep track of everything easily. You can handle most tasks in the comfort of your cab using a smartphone, tablet, or laptop.
This includes such details as:
- Storing data for IFTA. The International Fuel Tax Agreement (IFTA) is much easier to calculate for drivers that cross state lines. A TMS will automatically organize fleet miles and fuel by state. You input the data, and the platform does the math for you.
- Streamline IFTA and prep. When you enter a route into the system, it will automatically compute the miles per state for IFTA and the International Registration Plan (IRP) that requires license fees for certain jurisdictions.
- Anticipate invoices. Your TMS can also help you keep your cash flow in order by reminding you when payments are due, or invoices need to be processed.
Owner-operators looking to grow their business and simplify bookkeeping for truck drivers will benefit from Truckstop TMS for Carriers. Save time by letting ITS Dispatch manage the paperwork for you. Contact us today to get a free demo.
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