Sunday, November 30, 2008

ACCOUNTING IS ESSENTIAL

Now that I have owned a truck for a few years and have learned to watch the mechanics like a hawk. The next issue on hand is to be on top of the IRS. Even though you may be diligent in keeping records, there are numerous tax deductions that you may not even know about. There is a radio show on XM/Sirius radio that is hosted by Kevin Rutherford and he gives expert advice beyond what I am doing here. He frequently talks about accounting and how important it is to running a business. I couldn't agree more. Running any business is all about numbers and knowing every advantage that is available and disadvantage to stay away from.

There are numerous calculations to consider when owning a big rig. At the top of the list is fuel mileage. Even as the price of fuel has been dropping lately, the average truck only has a miles per gallon (mpg) of 6 or less. If your truck can get 7 or more by tweaking it a little or adjusting the type of driving you are doing, then you can lower your fuel costs and save thousands if not tens of thousands of dollars per year. There are many ways to do this. One is know the gear ratio, tire size, and type of transmission, and then calculating the optimal speed to drive. In many cases simply slowing down will give you more mpg. Idling will hurt your overall mpgs as well if you idle too much which is to say 5 or more hours per day.

There is a company that makes screens for your truck where you can roll the windows down and place them in to keep bugs out. I have seen some drivers strap generators to their trucks that run on either gas or diesel and then cut a hole in the back wall of their truck or crafted a special mount on their window to run an air conditioner that you might buy at any hardware store. Anything to save fuel. You could save up to $30,000.00 per year versus some drivers out there that get only 5 mpg and run harder and longer for less money.

Many companies have switched to Auxiliary Power Units (APU) which come with an A/C unit and a heating unit as well as 120 volt AC outlets for inside and outside the truck with options to plug an external power cord into the unit to provide shore power.

Maintenance comes in second as a necessary expense for the trucking business. If you don't find a good competent shop to repair your truck in a location that is convenient for your business, then you could wind up spending tens of thousands of dollars unnecessarily because one of the many repair facilities in the US may not know what they are doing and end up costing you bug bucks that you could have used for your retirement or health care. I have seen firsthand that some people with excellent reputations in their field of mechanics can get it wrong costing me upwards of $40,000 to $50,000 unnecessarily. This is no way to run a business and it can put you under quickly.

Accounting is the only way to know what your business is doing. It is the only way to pin point weak areas and know just what to fine tune in order to squeeze extra bucks into your pocket. If you don't know accounting, you are leaving yourself wide open to failure. The best thing to do is to find an accountant that has been doing trucking taxes specifically for years and that wants to work with you. The next most important thing is to make sure that accountant will do IRS audits. In fact the first thing you should ask the accountant is if they will handle an audit for you on a return that you prepared yourself. If they will, then there is a good chance that you have found a competent mechanic that will accomodate your needs. Even if you are an accountant it is important to find a good trucking accountant that knows all of the deductions that you are entitled to.

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