Exactly right. And if there's one thing that is certain in the trucking industry, it's that past performance doesn't dictate future opportunities. Basing your future projections off of something that is completely uncertain is foolhearty.

Although, the business model of "I have money in the bank, so I must be turning a profit" has its allure.

 

Many don't understand that turning a profit doesn't mean that you're not going broke.

 

I think you mean cash flow. I have known owners who have had cash flow but went broke due to not making a profit. If you are making a profit you should be able to survive, providing you have included all of your costs or expenses.

 

I would have said cash flow if that's what i meant.
I'm speaking of someone who's business structure doesn't include an actual payroll(fed,state,SS,medicare,UMC,WC) Your assumed "profit" includes your money's for work. So many go broke turning a profit.

 

If you have a sole proprietorship you can show a profit without actually having a formal payroll. The business may show a profit, but you could still go broke from not having enough profit to take care of your living expenses and taxes. Of course, if you are not showing enough profit to live then you won't need to worry about taxes.

There are many owners who think that as long as they have cash flow they are making money. I am not sure most owner operators who operate as a sole proprietorship pay themselves a salary or wage. They just spend what is left after they pay the bills. A friend of mine has a sole proprietorship and pays himself $2,000/month. I don't think most sole proprietors do that. I think it makes it easier to distinguish costs when you have a corporate structure. It makes it easier to pay yourself a salary or wage.

 

That's why i said you can go broke while still making a profit. I think many O/O's would find they are working far below wages if they ran comparison books with payroll and all the other associated costs including the items they fail to consider.

 

Is there any software out there that can help organize/simplify the operating costs?

 

Lots of programs for trucks designed by truckers using trucker math and accounting. Much better to use real accounting programs instead.

 

LOL! I like that answer.

 

Interesting...

Big difference between a sole proprietorship and a Sub-S Corp. Mainly in the SS taxes, and the scrutiny the books end up getting.

I've been running a Sub-S for almost a decade (non-trucking/home office). Back when we HAD an economy and there WAS CASH FLOW - I'd pay everything except my mortgage, child support, food shopping & medical (doctors & scrips) - out of my corporate account and take whatever $$ I needed for my "personal" expenses as "distributions" - which my accountant would straighten out at the end of the year as W-2 income. I make a payroll tax deposit of whatever my (accountant estimated) personal tax liability (since Sub-S's have no liability - any black ink goes on 1040 sched E) and go from there.

In discussions with my accountant - if I DO decide to go O/O right away - I'm going to run it similarly. Business (corp) pays for everything - EXCEPT - doctors/scrips, rent or storage (since I'm losing my house) - accountant will figure out my personal liabilities at the end of the year. As long as all the BILLS GET PAID, and I get FED - I'm not looking for a helluva lot OVER THAT for the first couple of years (especially in THIS ECONOMY) anyway.

Rick