4 Tax Tips for Trucking Companies

4 Tax Tips for Trucking Make Tax Season Less Stressful – and Less Costly for Transportation Companies

Resolving tax discrepancies or dealing with the IRS (Internal Revenue Service) can be stressful, to say the least. Even learning how to accurately file taxes can be a time-consuming and confusing proposition for any type of trucking business, from owner-operators to transportation companies with large fleets.

4 Tax Tips for Trucking Companies

1. Make estimated payments on a monthly rather than quarterly basis.

Make your estimated payments monthly, for two reasons—

1. It will be much easier to come up with a payment for one little month rather than a whole quarter, AND,
2. You can easily gauge what your payment should be based on what kind of month you just had. So if you had a kick-butt month, you’ll be flush with cash and you can send in a nice healthy payment. But if you had a sucky month, then send in a smaller payment.

2. Keep Receipts – or at least keep as many as you can – and if you miss a few – do this:

To make it easier on yourself, get a set of folders or other system so that you can just keep them by expense category right out of the gate. If you don’t like tallying up your receipts, you could even think about paying a neighborhood kid to total them up for you, maybe quarterly or even just twice a year.

The important thing to remember is this: Just because you don’t have a receipt doesn’t disqualify you from taking a deduction.

Let’s say you spend $7000 a month on fuel, but for a couple of months you didn’t keep all of the receipts for whatever reason. Simply estimate your fuel for those two months based on your expense for the other ten months.

IRS guidelines actually permit you to estimate your expenses this way if you have as little as three consecutive months, and those three months show a consistent pattern or relationship to your gross income.

Just estimating your expenses like this for a couple of heavy-duty expenses like fuel and repairs can easily save you $3,000 to $5,000 or more on your tax bill!

3. Choose the right legal entity for your business.

Just choosing the right entity to use for your trucking business can save you easily $5,000, every year. Very often, simply converting your sole proprietorship or single-member LLC to a Subchapter-S Corporation might allow you to cut your self-employment tax in half.

On a net income of $50,000, that would save $6,500 just like that. And that doesn’t include additional tax savings due to expenses that can be fully deducted through a corporation that are either non-deductible or only partially deductible to a sole proprietor or single-member LLC.

Before you decide to make a change, take the time to consult with a CPA or attorney that is on top of the legal and tax distinctions among the different entity types. Just because an attorney or CPA is able to create an LLC or corporation certainly doesn’t mean he or she knows the tax and legal features of each entity type.

Last but not least:

4. Be sure you don’t miss any of these frequently over-looked trucking deductions:

• Home office-related expenses and deductions
• Business furnishings, software (including cloud-based software) and equipment
• Supplies purchased on the road or at home
• Local business-related mileage
• Cell phone

The truth is, the tax code is so complicated that it’s easy to miss out on deductions that can save you money.

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