It was late on a Friday afternoon and I was already thinking of what seasoning I was going to put on the steaks when I took that last call. I love the details of making a steak taste exactly the way I like it. I also like the details on an accounting ledger . . . but, it appears I stand alone there. As OTR drivers, you understand the importance of details when taking care of your rig. You check tires on a regular basis, you hand pick the type of oil you use depending upon your vehicle. The details of maintaining your livelihood fill your mind because every day you’re not out on the road, you’re not making money.
When I took that call, it was from a driver who needed to ask me questions about trucker tax deductions. He had waited all year before looking them over and had no idea where he stood, financially. As we walked through all the possible tax deductions, he kept saying: “I bought this for the truck, but I paid for it with cash, so I don’t keep track of it. The amount is too small.” Well, he kept saying that over and over. It was then that I had to explain to him that shavings make a pile. The concept is simple, little things add up. If you spend four or five dollars on your truck every week that you do not account for, that adds up over a year. But, more importantly, it makes you pay attention to details. If you miscount the number of nights out, or you don’t deduct air freshener, toiletry items, duct tape, cleaning supplies, batteries, postage (all small dollar amounts), you are hurting yourself financially. In the end, shavings do make a pile – a much bigger one.
THE TAKEAWAY: If you take care of the small things, the big things will take care of themselves. Understand ALL of the tax deductions available to you as a trucking owner operator and track them early and often.
How to Track Shavings (a.k.a. Your Trucking Expenses)
Like a few of you out there, I tend to put on a few pounds every once in a while. So, I try to exercise. I walk five miles every day. I discovered that it was much more efficient to create a daily habit then it was to set a future goal. Future goals are a long way off, have no critical need today and can be started anytime. So, I put them off. The same is true for you when you attempt to track your trucking operations expenses. If you don’t do it every day, you’ll just put it off.
The coolest trick for tracking your trucking expenses is one of the easiest. And, it doesn’t cost you anything. I got it from a driver who had been coming to me for years. He said he chooses one debit or credit card and he puts only business expenses on it. Now this is not going to work for all expenses, but you end up with a bank statement that tracks what you bought and when you bought it. This takes care of a lot of the shavings throughout the year.
The most thorough way to track expenses is to find an app for your phone that is cloud-based so you can also access it from your computer. It is hard to beat the ability to put each expense in an app the moment it happens. This completely eliminates procrastination. A good app will allow you to enter information like revenue, deductions and also to track per diem and miles. Some will provide reports, as well as, give you profit per mile and expense per mile.
I know technology can be a pain, but this pain is positively worth the gain.
Why Track Shavings
I have to confess, I cheated. When I told you about walking every day, I had a little help from my dog. But I prefer to think of him as motivation for my health program. He really did make it easier for me to walk every day and for me to continue walking throughout the year. So, finding an incentive, a trick or reward can be very tough. Without some kind of motivation, however, creating a habit becomes even tougher. Here are my favorite motivators:
Make it Personal – Treat Yourself
This one is particularly good if you’re single. Give yourself something special. A cruise, a new pickup or a couple of small things like a portable grill or slow cooker. With the app telling you what your tax liability will be, put a few more bucks aside for yourself each month to celebrate the reward of a discipline well done.
Family – The Ones You Love
If you are a family man or women, you know how important family is. The thought of leaving money on the table for the IRS instead of your family should put enough fear in you to look for every shaving you can find. Your family is worth it.
Do The Right Thing – It’s Your Money
We all believe the right thing is to pay our taxes. That money benefits us all by giving us a country that is secure, where we have good roads and safe bridges. But there is nothing right about letting the IRS take money that really doesn’t belong to them. It belongs to you. Take care of your finances the way you take care of your truck.
THE TAKEAWAY: Doing the right thing doesn’t always have to be doing the hard thing. Make it easier to build a bigger pile of tax deductions by tracking your finances daily to ensure you keep every penny you can.
Finally, prepare for tax season by partnering up with a factoring company like eCapital. We accelerate invoice payment to just 24 hours, so you’ll be prepared no matter what comes your way. Best of all, your factoring fees are tax deductible! Plus, we offer perks like free fuel cards and access to our exclusive broker network!
About The Author
Jim O’Donnell is the CEO and founder of Trucker Tax Service, an eCapital services partner that exclusively serves the trucking industry. TTS will prepare individual and/or corporate tax filings that can be processed while you are on the road, and file extensions at the appropriate times of the year for those who are not quite ready to file their taxes.