A trucking software company like TruckingOffice is bound to talk about managing your trucking business, but let’s not forget that you owner-operators are the linchpin to your trucking business. So let’s chat a bit about taking care of yourself. No, we’re not talking about your diet or exercise.
Are your trucking papers in order?
Even if you’re the owner-operator, you still must keep records, including your own
- Inquiry To State Agencies for Driving Record
- Review of Driving Record
- Driver’s Certification of Violations
- Medical Examination Report and Medical Examiner’s Certificate
- Employer note verifying that medical examiner is listed on National Registry of Certified Medical Examiners
- Driver’s Application for Employment
- Driver’s Road Test Certificate or Equivalent
- Inquiry to Previous Employers: Safety Performance History Records Request
- Safety Performance History Records: Driver Correction or Rebuttal
- Inquiry To State Agencies for 3-Year Driving Record
- Pre-Employment Drug and Alcohol Documents
- Entry-Level Driver Training Certificate
- Longer Combination Vehicle (LCV) Driver Training Certificate
- Longer Combination Vehicle (LCV) Certificate of Grandfathering
- Multiple-Employer Drivers
- Skill Performance Evaluation Certificate
That is a lot of paperwork that must be kept up, even if some of them only have to be updated every three years. And none of them refer to making sure that the driver gets paid!
Driver payments are only one part of the paperwork that a trucking firm needs to manage. Those are important. How does TruckingOffice manage that?
If you’re a new owner-operator, you might be working on the principle that what gets paid goes directly into your pocket.
If you’re self-employed, getting paid seems like an unnecessary step. You just earned that money. Isn’t it yours?
Accounting, LLCs, and Owner-Operators
How you set up your trucking business matters. By setting up a trucking business with an LLC (limited liability corporation), you protect your home and personal assets from being taken if you’re sued. An LLC has other tax benefits as well. If you’re an owner-operator, with or without your trucking authority, you should have an LLC.
You can check your state’s regulations about how to form an LLC. Here in Ohio, all of it can be done online and in 2022, costs $99 through the state portal.
When you have a business, you don’t do accounting the same way.
Cash Based or Accural Based?
“If the money is in my pocket, it’s mine.”
This simple way of looking at finances at a business level isn’t the best. Businesses handle money differently than a sole proprietor might. Accounting practices are important. You want to get paid, you want to know who still owes you money, and how much you’re saving in deductions.
Tax preparation is only part of how accounting works. Cash flow is what we call the movement of money in a company. In a cash-based system, it’s entirely based on cold hard cash. When your invoice is paid, it’s income then and not before. When a bill is paid, you count it as an expense.
The accrual-based system is less visual. It takes into account invoices that have not yet been paid as income.
In some ways, it’s like a credit card. Did you buy the shirt with the credit card when you carried it out of the store, or when you paid the credit card bill a month later?
This accrual accounting system considers the date of the transaction. So when you send out an invoice, it’s considered as income to you even if you haven’t gotten paid yet.
When you set up a business in the US, you might be working with a cash system. Plumbers might work on a cash system because they expect to get paid when they unplug the toilet. Once the plumber agrees to take a credit card, they move into the accrual accounting system.
Because truckers don’t get paid by the shipping crew when the delivery is made, they must work on the accrual accounting system.
Pay Your Drivers (Even If That’s You)
Even if you’re your own boss, you should be paid what you’re owed into your personal account. Don’t use the trucking business accounts to pay your non-trucking expenses. Dog grooming – even if your dog is your co-pilot – is probably not a business expense. Pay yourself in a timely fashion – per load, per day, per week. That’s up to you.
Just like employees, you need the money to live.
Owner-operators must understand their own cash flow for their businesses. Where is the money coming from? Where is it going? Is the right amount going to the drivers?
TruckingOffice trucking software tracks driver payments for you. Taking care of your driver – yourself! – provides clear records of what you paid yourself when it’s time to file your personal income taxes. It will also provide all the driver records you need upon demand in an FMCSA audit or during an accident investigation.
Employees don’t quit jobs, they quit managers. Don’t manage yourself in a way that hurts yourself or the enjoyment of owning your own business.
TruckingOffice takes care of your business and your driver. Give it a try with your free trial today!