Truck driving is one of those professions that seems to pass down from generation to generation. Though there have been a number of changes to the industry over the past 50 to 75 years or so, many of the things that truckers from yesteryear had to prepare for truckers of today experience as well. One of them is tax season.
Depending on their size, trucking firms have a lot of expenses in a given year. As the dominant form of freight transportation in North America, according to the American Trucking Associations, the millions of tons delivered to various destinations requires a lot of preparation, both for owners and the drivers who they employ.
The following recommendations can help trucking firms adequately prepare for tax season.
Ensure Expenses are Traceable
You can't save on taxes if you haven't kept impeccable records tracking what expenses you've paid for over the past year. So before tax filing starts, ensure that you've kept track of what payments have been made contributing to the success of the company.
Be Mindful of Business Classification
The designations that companies establish are primarily there for liability and tax purposes. For example, trucking firms may decide that they want to incorporate, form a limited liability company or an S-corporation. Each one has its own set of tax advantages and obligations. If you're unsure of how they work, speak with an FBC tax professional for guidance.
Continue to Keep Older Records on File
Each year brings new tax codes and obligations, so you may be under the impression that because last year has passed, you might as well toss out those forms to save space. This is inadvisable, though, because you may still be audited by the government should they find an error in past tax filings. As a general rule, you should keep all of your business and tax records for no less than three years. Talk to an FBC tax professional about unusual circumstances, because you may want to keep some records indefinitely if you filed late in a previous year or didn't report income that you should have.
Differentiate Between What's Deductible and Non-Deductible
Fortunately, there are many business expenses that can be written off when filing your trucking company's taxes. This includes access fees, like the Internet or satellite radio, and trade association dues. You can even deduct the cost of cleaning supplies, provided you've kept your receipts.
Just be aware that there are expenses that can't be deducted. These include personal expenses and commuting costs, like the price of gas or highway tolls.
For more tax tips, talk to an FBC truck tax specialist.