Accounting is vital to any small business but can be intimidating for trucking companies. Understanding trucking accounting best practices can help you save time and money while ensuring compliance with tax regulations.
Maintaining separate accounts for personal and business expenses can simplify bookkeeping and make it easier to identify deductible expenses. It also makes it easier to prepare accurate income taxes.
Taxes
One of the biggest reasons truckers need an accountant is to keep up with their taxes. Often, truckers are required to make quarterly estimated tax payments and file IFTA reports. They need to do so, which results in fines and penalties. Additionally, truckers must carefully separate their personal and business expenses and save all receipts for mileage and other eligible expenses.
It’s also important for truckers to know which method of accounting to use: cash or accrual basis. The choice has a major impact on the accuracy of tax returns and reporting. Accountants for truckers can help a trucker determine the best option for their business.
Many owner-operators don’t have time to handle their bookkeeping and finances on the road. This can lead to errors that have major financial and legal consequences. Professional accountants can take over this responsibility so truckers can focus on driving. This can reduce the stress of running a small business and provide peace of mind that the books are in order. This is especially important if the IRS or state is auditing the trucker.
Financial Reporting
Trucking accountants help truck drivers, and trucking companies manage their books. Financial reporting is the process of refining and analyzing data from the bookkeeping step to prepare financial statements, cash flow analysis, and file tax returns. Financial reporting is governed by the frameworks of Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).
When running a business, it’s important to have accurate and up-to-date information on your company’s performance to make informed decisions. Detailed financial reports can reveal areas where the company is spending more than it’s earning or help identify ways to cut costs.
It’s also important to have separate accounts for personal and business expenses so that receipts are not confused with invoice payments. Trucking accountants can help you set up these accounts and link them to your credit card so that all your receipts are accounted for automatically. They can also assist you with IFTA compliance and streamlining accounting tasks using software for trucking businesses. This frees up your time to focus on what’s most important – driving.
Business Planning
The trucking industry is complex, and staying financially organized is essential for long-term success. Efficient bookkeeping practices can help you manage your finances, comply with tax regulations, and make well-informed business decisions.
A sound business plan can help you identify goals, set a time frame to achieve them, and determine the resources needed to reach your goals. In addition, a detailed budget can help you manage expenses and cash flow.
To ensure accuracy, updating your financial records regularly is best — ideally after every transaction. Regularly comparing your financial records with your bank statements can also help you identify discrepancies and correct them promptly. In addition, it’s important to maintain accurate mileage logs to claim tax deductions and improve fuel efficiency. Consider using trucking management or accounting software to simplify tracking your mileage and expense. These programs can also help you manage freight billing and receive payments from clients, even if they’re late in paying.
Financial Forecasting
A good financial forecast is key to understanding future expectations like sales, expenses, capex, debt, credit needs, etc. With solid forecasting, companies can avoid problems, such as cash flow disruptions, inventory shortfalls, slow disaster recovery, reduced valuations, and trouble obtaining credit.
Financial forecasting uses the company’s past performance records and trends to predict future financial outcomes. It differs from budgeting in that budgets are more conservative and focused on specific lines of a company’s business, while forecasts are strategic and broad.
Creating a forecast involves building projections for the profit and loss statement, which can then be used to create a projected cash flow statement and balance sheet. These pro forma statements are updated regularly to align with current data and assumptions. Depending on the type of forecast, you might start with revenue (units, volume, pricing), then add in your cost of goods sold and direct costs, followed by fixed and variable expenses.
Financial Analysis
The financial analysis evaluates the viability, stability, and profitability of a business, sub-business, or project. It can be performed for any number of purposes, including comparing financial data to those of similar companies and identifying trends. It can also help businesses establish trust with customers and investors by providing transparency.
Managing the finances of a trucking company can be complex and time-consuming. A professional accounting team can save truckers time and money by ensuring their records are accurate, up-to-date, and compliant with tax regulations. They can also help secure financing for new trucks and other business expenses by providing clear financial reports.
When you work with a reputable accounting firm, you can spend more time finding high-paying hauls and less time worrying about your business’s finances. They can help you separate your personal and business expenses, set up a dedicated bank account and business credit card, and track your mileage so you can claim deductions and make estimated tax payments. They can even help you manage your payroll and avoid costly mistakes that can lead to IRS fines or other penalties.
