Bottom Line
Tax Tips
“What is your profit at any given time during the year?”

by Barry and Howard of PBS Bookkeeping

Many truckers seem to rely on their checking account to tell them how they are doing. But this is not the way to run a business. You need to adhere to a bookkeeping system so you can produce information that is necessary for planning, tax projections, budgeting, cost analysis and to realize some kind of savings by possibly cutting expenses and where your money is going. The question again is "What is really meant by how are you doing?" To answer that question you need to know how much money you have collected for a particular period of time and how much money you have paid out for that same period of time. This is known as bookkeeping.

Recordkeeping is the process that allows you to do the bookkeeping. There are various methods used in keeping books. One type that has been used for quite some time is the "shoebox" method. This method is simply a collection of receipts, paperwork, cancelled checks and credit card charges all thrown into a box. At the end of the year, these pieces of paper are supposed to be organized in some orderly fashion by expense category. This is the start of the bookkeeping process. However, that bookkeeping will not be very meaningful since you could have made use of the numbers during the year. But it will enable you to do your taxes. However, when your tax preparer tells you that you owe a large amount of income and social security tax at the end of the year, you may not understand. You'll usually complain, "I've spent all my money on my business and I have nothing left over. How can I owe so much in taxes? I did not make any money."

A lost receipt is a lost deduction

There are ways you can do your bookkeeping and recordkeeping so you know how your business is doing during the year so proper planning can occur. Bookkeeping is a means of keeping track of your business. Keeping accurate, organized records is essential to the success of your business. A lost receipt is a lost deduction and a lost deduction means more of your money paid out in taxes. Developing good recordkeeping habits can save you thousands of dollars. Have some type of filing and recordkeeping system in your truck for recording expenses, filing receipts and other important business documents. Keep a planner or calendar book in the truck for recording expenses you cannot get receipts for such as truck-washes, laundry, unloading, etc. Record all the details of the expense, date, amount, to whom paid and for what. For example, when paying lumpers for loading and unloading, it's essential to log their name, social security number and amount paid in your planner.

A recordkeeping system doesn't have to be complicated

Your system just has to accurately reflect what you spend and what you take in. Bookkeeping is nothing more than grouping and summarizing all your income and expenses so they can reflect, in an orderly manner, how you are doing. It can tell you how much you have collected, how much you have spent by category such as fuel, insurance, repairs, parts, etc. It can tell you if you have been successful and highlights areas where your expenses should be examined. In short, it gets you thinking about your business and what you can do to make it better. There are various bookkeeping methods available to you other than the shoebox method.

A trucking record book

One method is to buy a record book specifically suited for truckers that allows the owner-operator to record their expenses on a daily or monthly basis by type of expense. These books are readily available in stationery stores throughout the country. It may be more convenient to record your expenses monthly. You would record your income as it's received. An alternative approach would be to set up separate file folders for each type of expense (for example: fuel, parts, tires, repairs, supplies) and then total them at the end of each month.

Keep up a good worksheet

Another method to help you record your income and expenses is to make up your own worksheet like the one shown or use an accountant's pad available in any stationary or office supply store. Simply list each month across the top of your worksheet and your income and expenses down the left side. You can then total your expenses and subtract them from your income to arrive at your net income or profit.

Of course, your computer

If you are doing your own bookkeeping, we recommend using a computer, if possible. There are many good software programs available specifically designed for trucking or you can simply use a spreadsheet program such as Excel. You would gather all the same income and expense information a professional bookkeeper would need and enter that information into your own bookkeeping software program, or spreadsheet, etc. You will have a section for entering your income and a section for entering expenses. You want to make sure to enter your information as regularly as possible.

Trucking-specific bookkeeping programs

You also could use programs such as Quicken or Microsoft, which are not trucking specific but will get the job done. Once you have all your income and expense information in an organized format, you will be able to review that information to gain more insight into your business operation. Whether you are looking at a professionally prepared profit & loss statement or a self-generated one, you will have the information necessary to start man