Accounting is a crucial part of running a trucking business. Still, it doesn’t mean you have to do it alone. Professional accounting services for trucking will make this task less of a chore so that you can focus on the road.
Bookkeeping and accounting are both intimidating, especially for new owner-operators. It can get complicated without proper guidance, leading to discrepancies, losses, and troubles with the IRS.
In this post, you’ll learn more about trucking accounting, how to make it easier, and what mistakes you should avoid.
How does accounting for truckers work
Even if you hire a certified public accountant (CPA), you still need to know the basics of truck accounting. This way, you’re not in the dark about your business’s financial health.
Overall, accounting involves keeping tabs on your receipts, invoices, and other documents. This includes paperwork for all your expenses like fuel, maintenance, toll, food, and so on.
Depending on what suits your trucking business, you can choose from a cash or accrual accounting basis.
With a cash basis, you recognize revenues once you receive payments on your freight invoices. This also includes expense deduction once you pay for it. This basis is straightforward and easier for most truckers to maintain.
On the other hand, there’s also the accrual accounting basis. Under these terms, you’ll recognize revenue and expenses once you raise them, regardless of when the funds moved in or out of your accounts.
Difference between bookkeeping and accounting for truckers
Bookkeeping and accounting are two different things. Nevertheless, they go hand in hand to ensure that your business’ finances are in order.
In general, bookkeeping is the process of maintaining your trucking business’ financial records. It’s the daily process of logging transactions on ledgers, keeping receipts, and safeguarding documents.
Unfortunately, many truckers have to juggle bookkeeping with driving, invoicing, and other operational tasks.
Meanwhile, accounting is the analytical part. This includes report generation, tax planning, and cash flow analysis.
Overall, accounting makes all the bookkeeping efforts make sense for your business. And truth be told, most truckers can’t do it independently without making costly mistakes.
Do I need professional accounting for my trucking business?
You don’t have to be a financial whiz to run a trucking business. You can always utilize accounting software to automate specific tasks.
However, there are things best left to professionals. This includes your business’ accounting.
Here’s why you should consider hiring professional accounting services instead:
Focus more on your trucking business. Letting a professional company handle your accounting needs will let you focus more on running your business. You can spend more time finding high-paying hauls instead of being distracted by accounting duties.
Save time and money. While professional accounting services cost a fee, it’s much smaller compared to the savings you’ll enjoy.
Keep track of your finances. Professional accounting keeps track of all your revenue and expenses. You’ll know where each cent goes.
Avoid taxation problems. Truckers often receive penalties from the IRS due to tax discrepancies. This is easily avoidable with the help of accounting services for trucking businesses.
Easier cash flow management. Above all, professional accounting manages your collections, reports, and expenses to see where you stand in your cash flow. This saves you from poor accounting management, which can lead to substantial losses.
Guaranteed compliance. Many truckers are too busy to check changes in regulations that affect them. But with an accounting service, you’re always on top of compliance and won’t face hefty penalties.
How to start accounting for trucking
Even if you have a CPA, it’s still crucial to have an expert guiding you on accounting fundamentals.
For owner-operators or independent truckers, here are the easy steps to get started on truck accounting:
Create separate business accounts
It’s essential to open separate bank accounts for your business. This way, your personal expenses won’t mix with operational costs. It will also help streamline accounting duties instead of sorting out confusing transactions.
Find an accounting service company
Not all accounting service providers are suitable for trucking businesses. It’s best to hire a company specializing in the trucking industry, like Factoring Express. This way, your accounting firm knows how your business works, and you need to manage your finances.
Send the paperwork to your CPA
Since an accounting service provider will handle all your paperwork, you can focus on driving and delivering. At the end of the year, the accounting company will send you reports and tax preparations that you can review and give to your CPA.
Overall, professional accounting takes a lot of responsibilities off your shoulders. It also gives you peace of mind knowing that your finances are in good hands.
Common accounting mistakes of truckers
Owning and running a carrier business has its challenges. Specifically, trucking company owners struggle with accounting mistakes. If not addressed early, such errors can have financial and legal repercussions.
Attempting DIY accounting. It’s common for new truckers to try DIY accounting. This works, but once your business gets bigger, you’ll also start committing mistakes. Often, these mistakes have devastating consequences on their cash flow.
Wrong categorization of expenses. Too many expense categories are a sign of poor bookkeeping. And when bookkeeping isn’t managed well, the problem will trickle down to accounting. It will be a big problem once you file taxes, apply for loans, or try to figure out your actual profits.
Not tracking accounts receivables. Tracking your payments is crucial in ensuring you have enough funds to pay your drivers and cover operational costs. Poor tracking can easily strain your cash flow.
Improper tracking of liabilities. Tracking liabilities are as significant as tracking your payments received. Make sure you reverse liabilities once they are paid. This way, you’ll have an accurate record of your finances.
Missing invoice details. Many truckers forget to indicate their rates, fees, and other important changes that should be on the invoice. This results in losses and payment delays in correcting the errors.
Hiring the wrong accounting service. As mentioned, not all accounting services are suitable for your business. You should only trust accounting professionals with experience in the trucking industry. You’ll get more value from trucking accounting experts than those who work in general industries.
Let's get your accounting in order!
Are you at a loss on how to handle your trucking company’s accounting? Instead of wasting time digging into receipts and software, you can request a consultation with Factoring Express.
Our team of accountants, bookkeepers, and tax preparers will take the burden off your shoulders. We specialize in trucking accounting, so rest assured that your business is in good hands.
