In order to know how your trucking business is doing, you need to be clear with a few numbers. It’s not taxes like IFTA or IRP. It’s not miles per state or even miles per trip. The key number for your trucking business in your cab is your expenses per mile. It’s the number of cups of coffee and breakfast on the road, the tolls and weight fees, your loan payments and insurance, and even that extra Red Bull you bought. How much you spend may even be more important than how much you get paid.
Trucking Business Expenses
The IRS has a pretty good handle on what’s a business expense. “Ordinary” and “necessary”? What’s ordinary and necessary for a trucker? The extra can of Red Bull to get through the afternoon?
In general, anything you pay for in order to run your business is an ordinary expense. That would include envelopes to keep your receipts, insurance on your equipment, and a smartphone to manage your ELD and trucking business.
The problem is – truckers live on the road. So what about hotels? What about food preparation equipment in your cab? If there’s one business where the line between personal expenses and professional expenses lies, it’s pretty blurry. We’re not tax specialists, so we’re not going to advise you on your expenses, but we will say that anything you buy to run your business, to live on the road, and to take care of your rig is an expense you need to track.
Whether the IRS recognizes an expense or not, that money is leaving your wallet and that’s what has to be tracked. We break down expenses in three categories: macro, mini, and micro.
Macro Expenses: The Trucking Business Office in Your Cab
Obviously, you need equipment to run a trucking business. Whether you
- lease to own
- take out a vehicle loan or
- pay cash
your truck and trailer are straight-up business expenses. Add on
- insurance on the equipment
- insurance/bond for your authority
- maintenance expenses, including brakes or new tires
- software to run your business
- services such as ELD
- IFTA, IRP, HVUT
and you’ve got a lot of money invested already just to be able to pick up and deliver a load. We call these the macro expenses – the big things that can get you on the road – or keep you off the road.
Tracking these expenses can be complicated to reduce to a simple metric like expenses per mile. If you pay your ELD on a monthly basis – that’s pretty easy to compute. Your insurance costs? You have to know how much you’ve paid and how many miles you’ve driven and added those numbers into an expense report, divided by… It’s enough to make a bookkeeper cry.
Mini Expenses: Staying on the Road
Mini expenses are not small expenses. They are the purchases you need to stay on the road. There are a lot of mini expenses you have to track:
- weighing fees
- equipment inspections
- regular maintenance such as oil changes or brakes.
These are often included in the trip envelope and good truckers track these closely. You can also add office expenses such as a computer or tablet for billing purposes and paper to mail invoices. These costs get tracked closer than anything else does because they’re right there in the cab with you. These important expenses keep your trucking business running.
Micro Expenses: Making the Road a Better Place to Be
Micro expenses are divided into two parts: the one time purchases that you need, and the recurring expenses you need to live.
You’re living on the road. That doesn’t mean you have to live in a dumpy truck with a too-small blanket and eating out of tuna cans with pull-top lids.
For example, you need a tool. You don’t need to re-buy the tool every time you need it. You have a toolbox to keep it in and pull it out when necessary. But that tool is just as much a business expense as your ELD service. The scale may be different between a screwdriver and a software package – but both apply as expenses.
- The seat cover for your driver’s seat
- A good sleeping bag for the cold winter nights
- The television and the Netflix subscription
all of these are maybe not necessary (except that sleeping bag) but you’re a human being. You don’t have to suffer with a crappy cracked vinyl seat that pinches you ever time you sit down. Having an entertainment option that lets you participate with the rest of society is important.
Even the odd extra can of Red Bull or the fuel additive you need because you’re driving across Montana this week – all mini expenses.
Tracking Your Expenses in Your Trucking Office In Your Cab
How much of what you buy for your trucking business do you buy while you’re sitting in your cab?
(That Amazon Prime membership may be dangerous, right?)
If it’s in your cab, it’s easy to track, right?
Maybe. Maybe not. Do you keep all your coffee receipts?
The right way to keep track of your expenses may not be a trip envelope. It may be an app or online tracker that lets you enter the purchase when you make it – and then forget about it. Then later, when it matters, the software handles the math and tells you what you’ve spent – in cash or in credit. The more accurately you enter the data, the more precise that number is.
Why Track Expenses That Aren’t Tax Deductible?
The number we need isn’t how much you’ve spent. It’s how much you’ve spent PER MILE.
That’s a complicated number to reach. It’s not one that you can figure out quickly because there are so many numbers involved. So why is it important?
The expenses per mile tell you how much you pay to drive your truck.
It’s the number you have the most control over. You can wait for the high ticket loads that will pay off – but how long will you be waiting? Will you be missing good loads to try to score the big one?
Your expenses are under your control. You can search for a better deal for insurance. You can cut your hotel bills during the winter by getting a better sleeping bag that will keep you warm. You can buy your fuel additive – and your Red Bull – in bulk.
When you decrease your expenses, you increase your revenue per mile.
When you know your expenses per mile, you know when to take a load – and when to pass on it.
Trucking Management Software
If you’re running a trucking fleet or you’re the sole proprietor owner-operator, you need to know your revenue per mile and your expenses per mile. And you want to have them available when you need them.
That’s what a good trucking management software will do for you.
If you’re looking at a couple of different trucking software packages, this should be your first question: how does the software report these numbers?
Unless it’s simple and fast, it’s not the software for you.
Let us suggest that if your program doesn’t offer a report that shows these numbers, then your software package isn’t worth what you paid for it.
What do you need?
So we invite you to try TruckingOffice trucking management software. You can try it for free to discover what your expenses per mile and your revenue per mile – and all the other details of running your trucking business in your cab.