A business of any size that specializes in trucking must maintain accurate accounting records. It is the only way to guarantee compliance with all state requirements and receive a stable income. Bookkeeping for the truck operator can be daunting, but it keeps track of revenue, costs, and mileage. Let’s talk about the features of accounting in this industry and what mistakes to avoid.
What is bookkeeping for truck drivers?
Accounting is an integral part of the work process in trucking organizations. Good financial service helps organize and control all cash flows.
Besides, the accounting service prepares tax documentation according to legal requirements.
In addition to accounting, a truck driver must also control his working hours and record activities. It is necessary not only to comply with the rules but also to improve road safety.
Clear organization and transparent accounting allow trucking companies to operate as efficiently as possible, providing all the necessary data to help the owner make informed decisions about business development.
Bookkeeping for truck drivers: DIY vs. outsourcing
Truck owners understand the importance of accounting to business success, but sometimes it can be challenging to keep track of all transactions on your own. Nowadays, many programs facilitate the management of trucking and accounting, but sometimes entrepreneurs make a choice: do all the financial work independently or delegate such a job to professionals.
Each option has its pros and cons. Doing all the work yourself is cheaper, but it takes a lot of time. Outsourcing is more expensive, but it frees up your time and allows you to focus on other important issues and needs.
You can combine two options: use trucking programs to automate accounting tasks and outsource more complex work.
Keeping proper financial records is time-intensive and small mistakes can be costly. BooksTime makes sure your numbers are 100% accurate so you can focus on growing your business.
How to find an excellent bookkeeping service?
Accounting systematizes financial reports and gives a complete picture of the state of your trucking business. There are many benefits to using professional accounting for businesses. Let’s discuss the main details when people try to find an optimal truckers bookkeeping service. It must provide the followings:
- Scanning and archiving files eliminate the need to control the physical copies of documents. At the client’s first request, the accountant must provide electronic records.
- Secure online platform to view documents and profit and loss statements. You do not need to visit the office or call a bookkeeper to view the required report. It is essential for drivers who are on the road and cannot communicate with an accountant.
- Industry benchmarking: it’s helpful to find a company that collaborates with other truckers to compare your reports with those of other organizations of a similar size.
- Tax reconciliation: companies offering such services categorize data and analyze income and expenses.
- Tax preparation: each trucker must pay quarterly dues based on profit margins. When calculating tax estimates, a bookkeeper may also use profit and loss statements during the year to accurately determine the number of tax payments.
Choosing the right accountant will help your business stay afloat. Using the above recommendations allows you to make the right decision that will be beneficial in the long term. You can concentrate on driving, and someone else cares about economic matters.
Some tips on how to make trucking accounting
Even if you are delegating financial responsibilities to a certified accountant, you still need to know the fundamental aspects of trucking bookkeeping. You will not be able to step back entirely from this type of work. Below there is a general structure you may use for bookkeeping in the trucking industry:
- Open a business account to separate professional results from personal finances. Mixing money makes it challenging to identify which transactions fall into which category.
- Determine the type of legal entity: you can do business as a sole trader, but this creates unlimited liability. You will be liable for all assets in legal proceedings. Therefore, it makes sense to take the time to set up a limited liability company.
- Determine the basis of accounting: cash and accrual methods are allowed. Your choice will affect how you complete and file your tax return.
Truckers need to control costs and keep supporting documents. On the road, drivers face numerous potentially tax-free charges, such as fuel, parking fees, and car maintenance. You may deduct actual car expenses instead of the standard mileage calculation method.
Best practices of trucking bookkeeping
Bookkeeping takes a lot of time. The effective simultaneous solution of financial and organizational issues becomes a headache. Here are a few practices that can help you balance your responsibilities:
- Use special software: accounting programs will simplify many financial transactions in 2022. You must carefully consider which tools to invest in to get a reliable, profitable and helpful automation service.
- Don’t forget about the fuel card: they act like standard credit cards but are tied to a driver’s number and allow you to buy fuel at a discount. Fuel cards enable you to control, organize and display the data necessary to prepare IFTA reports.
It is always an excellent idea to contact CPA to provide accounting services. Hiring a full-time specialist is unnecessary; outsourcing allows you to select only the needed services, reducing overall costs. We recommend working with an expert in the transport sector who knows all the problems and peculiarities of the industry, and not with a universal accountant, even if it costs more.
The most common mistakes in the accounting
Correct accounting in the field of trucking requires no less training and experience than the process of delivering goods. Careful analysis of reports allows you to identify areas where you can save money, e.g., by optimizing routes or negotiating better rates with suppliers. While people usually learn from experience, here are a few mistakes to avoid in accounting:
- Procrastination: some truck owners put off accounting until later. Remember that it becomes increasingly difficult to put things in order in accounting records over time. The situation worsens when there is no separation of personal and business operations. Ignoring financial procedures may cause you to miss filing deadlines or tax payments.
- Misinterpretation of tax payments: the tax system for trucking companies is quite complicated, and even poorly qualified CPAs can sometimes not keep track of all the details and changes. As a result, you may incorrectly calculate the number of expenses that are not taxable. It may also result in additional costs or mandatory audits.
Trucking accounting differs from standard bookkeeping to keep track of mileage, vehicle fleet, dispatch service work, and IFTA reports. You also must store all mileage and trip data. A competent and error-free accounting solution will provide the necessary data and tools to ensure effective trucking management.
Regardless of the business’s size and how long you’ve been in the business, knowing the ins and outs of trucking bookkeeping will help you stay within industry laws. It will also let you make informed decisions and find resources for the company’s future development. We recommend seeking professional help to avoid accounting mistakes, increase profitability and save time.
Bookstime offers customers customized services. We are ready at any time to connect clients with an accountant who has extensive experience in the trucking industry.
Author: Charles Lutwidge