Bookkeeping for Truckers 101

Accounting is a necessary but often tedious aspect of small business ownership, especially for trucking companies. It involves maintaining financial records of daily transactions and using them to create financial statements, analyze cash flow, and plan for taxes. All this work ensures you are able to stay on top of where your business is holding, ensure its financial health and chance of success, and ultimately its growth. 

Here is a quick guide to accounting and bookkeeping for truckers:

Create a Business Account Separate From Your Personal Account:

To streamline your accounting and make it easier to track your business finances, it’s important to separate your personal and business activities by opening separate business accounts. This can include a separate checking account and credit card that you use exclusively for business purposes. Mixing personal and business funds can make it difficult to accurately track your expenses and income and may cause problems when it comes time to file your tax return, particularly if you have expenses you wish to write off. 

For truck drivers, it can be especially challenging to distinguish between personal and business expenses, as some costs, such as gas and food, may overlap. By keeping your personal and business finances separate, you’ll have a clearer picture of your business’s financial performance and have an easier time with taxes and compliance down the road.

Pick a Lane and Choose A Legal Entity Structure:

To begin setting up bookkeeping for your trucking business, it’s important to first determine whether you are an owner-operator or a freight broker. Owner-operators are independent contractors who own their own trucks and operate under their own authority, while freight brokers are companies that act as intermediaries between shippers and carriers, charging a fee for finding loads and negotiating rates. Once you’ve established this, you’ll need to decide whether to operate as a sole proprietor or incorporate your business. This decision can affect how much paperwork you need to keep track of, as well as your legal and financial responsibilities. It’s important to do your research and understand the implications of both options before making a decision.

Then, choose a legal entity structure: 

There are two main types of entities used in the trucking industry: corporations and LLCs. Corporations are taxed differently than LLCs, which makes sense because corporations are owned by shareholders while LLCs are owned by members. In addition, corporations must file annual reports with the IRS, whereas LLCs don’t have to do that.

In order to protect themselves against lawsuits, truckers need to consider forming a Limited Liability Company (LLC). This is a separate legal entity from the driver himself. It protects the driver from being sued personally if he causes harm to others.

Track Your Expenses and Retain Your Documentation

It’s essential for trucking businesses to keep track of their expenses and retain supporting documents, as these costs can often be tax-deductible. 

Truck drivers may incur a variety of expenses while on the road, such as fuel, meals, lodging, car washing, tolls, parking, and vehicle maintenance, and many of these charges might be tax deductible (another good reason to keep your personal and business finances separate).

These costs will need to be deducted using the actual auto cost method rather than the standard mileage method because the IRS sees semi-trucks as qualified nonpersonal use vehicles.  To track your expenses and ensure their validity, be sure to keep records of each purchase’s amount, date, location, and business purpose, as well as documents such as receipts, trip logs, and account statements. It’s important to retain these documents for at least three years, as this is the amount of time the IRS typically has to audit you.

Handle Your Tax Responsibilities

As a business owner, it’s important to make quarterly estimated tax payments to cover your income and self-employment taxes. This is also true for truck drivers, who may incur additional tax obligations depending on the length of their trips and the size of their vehicles. These may include the International Fuel Tax Agreement (IFTA) and the Heavy Vehicle Use Tax (HVUT). The IFTA is a way to redistribute fuel taxes paid by truck drivers in the lower 48 states and Canadian provinces, and it applies to drivers of vehicles weighing more than 26,000 pounds or with at least three axles that cross multiple states or provinces. To comply with the IFTA, you must report your trips and fuel purchases quarterly, and the IFTA office in your home state will allocate your payments to the appropriate jurisdictions and determine if you owe more or are owed a refund.

The HVUT is an annual fee that must be paid by truck drivers who operate vehicles weighing at least 55,000 pounds for more than 5,000 miles on public highways. To stay in compliance, you must file Form 2290 with the IRS and pay any applicable taxes by the last day of the month following the month you first used the vehicle on public highways. If you owed taxes in the previous year but not in the current year, you must file Form 2290 to report the change and suspend your responsibilities.

Choose An Accounting or Bookkeeping Software For Truckers

Thanks to the fact that we live in the Internet Age, the days of handing a bag full of receipts and spreadsheets to your accountant are long over, and bookkeeping for truckers got a whole lot easier.

There is now plenty of bookkeeping and accounting software for truckers available, that will help you maintain clean records and books. 

Related: What is QuickBooks and What Does It Do?

Pick an online platform to manage all your bookkeeping. While (currently) there is no ‘accounting software for truckers’ specifically yet, (that would be very handy) QuickBooks might be your best bet. Check out Quickbooks Self-Employed, which is a great option for owner-operators.

Get Expert Advice

Even if you’d like to do your own bookkeeping, it’s important to have access to an expert in bookkeeping for truckers, to pick their brains and hear their advice.

While amazing platforms like QuickBooks store and analyzes data for you, you will still need a human bookkeeper or accountant to ensure you are receiving sound financial advice and keeping you abreast of the latest financial trends and developments (eg: changes in tax legislation), which will save you money in the long (and short) term. Using a human bookkeeper also saves you the time and attention you will need to devote to ensuring your records and books are accurate and accurate.

The good news is that you don’t need to start scouring job boards on the Internet to find an accountant that you have to pay an exorbitant salary to sit in your office.

Many businesses are choosing K9 Bookkeeping to be their full-time remote bookkeeping solution, recognizing the benefits of outsourcing their billing departments for our exceptionally affordable prices and first-class service.

To connect with your future full-time Account Manager with a free consultation to discuss how K9 Bookkeeping can help them focus on scaling up, call our team today!

Related: Why Should You Use K9 Bookkeeping?

We’re happy you found this article informative! Go back to our blog page to find more tips, tricks and guidance on bookkeeping, to ensure your business is financially sound and ready to grow to the next level.

Running a business is hard work, bookkeeping shouldn’t be. 

Let our team of professional bookkeepers take care of your books and receive accurate, detailed reports every month. Our team of experts is laser-focused on the latest trends and premier customer satisfaction, so you can always be sure you’re getting the best care and service. Your personal account manager will focus on handling your books, leaving you to focus on growing your business and leading it forward.

Click here to schedule a FREE consultation to join the hundreds of business owners already working with K9 Bookkeeping to help their businesses grow.