The owner-operator needs to know how much money he has collected for a particular period in time and how much money he has paid out for that same period of time.
The professional expediting owner-operator can count people from different occupational specialties among his friends/business associates; his mechanic, his lawyer, perhaps a helpful person from his carrier. But, there is probably no one who has as great an impact on his business, both short and long term, than his bookkeeper/accountant.
Of course, the bookkeeper performs the typical number-crunching duties for his client – especially tax preparation – but this professional can offer so much more to the independent business person.
A multi-faceted professional:
Today’s bookkeeper is part accountant, part tax whiz and part financial analyst.
In today’s entrepreneurial company (which is a good description of the expediting owner-operator), the heart of the American economy and the key to its future job growth, the bookkeeper is the de facto Chief Financial Officer. Even the greatest CPA cannot create strong financial statements from flimsy data.
Who cares about a small company’s financial statements?
The bank making a loan decision. The vendor deciding whether to extend credit. The IRS.
Then there are the owner-operators themselves. One catastrophic cash flow projection, one costly worker reclassification or one missed vendor background check—and soon there is one former entrepreneur.
The owner-operator needs to know how much money he has collected for a particular period in time and how much money he has paid out for that same period of time. Many expediting owner/operators rely on their checking account to tell them how they are doing. But this is not the way to run a business.
Record Keeping
The first step is record keeping. There are various methods that are used in keeping books. One type that has been used for quite some time is the “shoebox” method. The shoebox method is simply a collection of receipts, paperwork, cancelled checks, credit card charges all thrown into a box.
At the end of the year these pieces of paper are supposed to be put in some orderly fashion by expense category. This is the start of the bookkeeping process.
A professional bookkeeping service will usually provide the owner-operator with a checklist of items needed to prepare a Profit & Loss Statement. Typically, the owner-operator would provide his bookkeeper with monthly income and expense information; for example, a settlement statement showing gross pay received and a breakdown of all expenses.
This would include receipts for all cash purchases, a copy of the check register or check stubs, and the monthly credit card statements.
A lost receipt is a lost deduction and a lost deduction means more of the owner/operator’s money paid out in taxes. Developing good record-keeping habits can save the expediter thousands of dollars. It’s essential to have some type of filing and record-keeping system in the truck for recording expenses, filing receipts and other important business documents.
The owner-operator should keep some type of a planner or calendar in the truck for recording expenses he cannot get receipts for, such as, truck washes, laundry, unloading, etc. Be sure to record all the details of the expense.
One method is to buy a record book specifically suited to professional drivers that allows the owner-operator to record his expenses on a daily or monthly basis by type of expense. These books are readily available in truck stops throughout the country. It may be more convenient to record the expenses monthly.
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.
Another method to help the owner-operator record his income and expenses is to make up his own Worksheet or use an accountant’s pad available in any stationary or office supply store.
A record keeping system doesn’t have to be complicated. It just has to accurately reflect what is spent and what is taken in. Bookkeeping is nothing more than grouping and summarizing income and expenses so that they can reflect, in an orderly manner, how the business is doing.
With accurate record keeping, the expediting owner-operator 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 by knowing where the money is going.
Bookkeeping
Many expediting owner-operators have discovered the benefits of using a computer for their bookkeeping needs. There are many good software programs available specifically designed for trucking or simply use a spreadsheet program such as Excel.
The owner-operator would gather all the same income and expense information a professional bookkeeper would need and enter that information into the bookkeeping software program, or spreadsheet, etc. There will be a section for entering income and a section for entering expenses. The information should be entered as regularly as possible.
A list of trucking specific bookkeeping programs includes:
- Profit Tracker by Edonna Products Service, Inc. – www.edonna.com
- The Truckers Helper by iFleet,Inc. – www.truckershelper.com/home.asp
- Truck Books by Barry & Howard – www.pbstax.com/
- Profit per Mile by Omni Communications – www.2omni.com/enter.htm
Additional programs include Quicken or Microsoft Money. Though not trucking-specific, they will get the job done. Once all the income and expense information in an organized format, the expediting owner-operator will be able to review that information to gain more insight into his business operation.
Whether it’s a professionally prepared Profit & Loss Statement or a self generated one, it provides the information necessary to start managing cash flow and controlling costs.
It’s easy to see why the bookkeeper/accountant can be considered the owner-operator’s best friend. Doesn’t it make sense that the expediting professional who wants to succeed in this business should add another professional to his team to help him achieve that success?
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What the Professionals Can Provide
PBS Tax & Bookkeeping Service has been serving the owner-operators of the transportation industry for over 25 years and are regular contributors to trucking magazines, Expediters Online.com and Expedite NOW.
The company also offers a comprehensive book, “Successful Trucking”, which provides 25 chapters dedicated to helping the trucking entrepreneur with his/her choice of career.
It should be noted that while “Successful Trucking” is designed for a general trucking audience, virtually all of the information within the guide is applicable to the business of expediting and it will benefit the prospective and new owner-operator and driver in the emergency freight profession.
This company is an example of what to look for when shopping for a bookkeeping service/tax preparation service. A list of their services include:
Income Tax Preparation
Individual, Partnership & Corporate tax returns are prepared with the objective of paying the lowest tax possible. Tax return preparation includes preparation of Federal and State (all states) returns including Estimated Tax vouchers as well as all necessary schedules. They provide a “Tax Organizer” which is specific to trucking to help gather the proper tax information.
Tax Projections
Tax projections can be done anytime throughout the year to determine tax liability. This allows for proper tax planning, accurate estimated tax payments and cash flow requirements.
Bookkeeping Service (Single Entry) Choose either Monthly or Quarterly Service
They offer monthly and quarterly bookkeeping service which includes monthly or quarterly profit and loss statements including a breakdown of profit and expense ratios, annual income tax projection, quarterly estimated tax vouchers, telephone and in-office consultations.
Bookkeeping Service (Double Entry) – Choose either Monthly or Quarterly
PBS offers monthly and quarterly bookkeeping service which includes preparation of a general ledger including bank reconciliation, statement of assets & liabilities, profit & loss statement and quarterly estimated tax vouchers, annual tax projection, tax planning, in-office visits or phone appointments, as well as financial consulting and retirement planning. They advise on important business decisions, such as, equipment purchase and incorporating vs. sole proprietorship.
Quarterly Bookkeeping Review Service
PBS offers a review service for contractors doing their own bookkeeping. Whether manual or computerized, they review the contractor’s quarterly operating statistics. They comment on any irregularities, advise on quarterly estimated tax, tax planning, telephone calls, as well as financial consulting and planning. They also advise on important business decisions.
Corporate and LLC Formation
This firm helps to determine which entity is best including formulations in all states. Their service includes checking name availability, preparation and filing of Articles, preparation and filing of SS-4 Form for new Federal ID number, preparation and filing of Form 2553 – Sub S Status (if applicable), obtaining Seal and Kit which is needed for maintaining required business documents. They also provide written organizational information and guidelines on how to operate as a corporate or LLC entity.
IRS Representation
PBS is able to assist with tax controversies that contractors may be faced with now or in the future such as IRS audit representation, filing of back tax returns and negotiating payment arrangements on tax liabilities. IRS representation can be handled regardless of contractor’s state of residence.
New Business Start-up Consultation
There are many factors to consider and many pitfalls to be avoided when just starting out or when making the initial decision to become an owner-operator or independent contractor. PBS offers a “New Business Start-up Consultation” which is done over the telephone or in person. During the consultation, they do an in-depth analysis of the owner-operator’s particular circumstances and options.
Contact Information
PBS Tax & Bookkeeping Service
18757 Burbank Blvd., Suite 216
Tarzana, CA 91356
(800) 697-5153
