i have driven for someone else for about 7 years and i got all the ropes tied up just not the taxes and i wanted everything about taxes to be in my head so that i knew what to expect!! Come tax time!!

 

REEEEEEEEEEEEEEAAAAAAAAAAALLLLLLY bad idea to do your own taxes. Get suggestions from other o/o for good accountants with trucking experience.

Not only will a good trucking accountant know the ins and outs of trucking taxes but it will save you a major headache. I always prepare my own receipts/expenses summary (I've had someone else do it- sent them all my receipts- but somehow things like cell phone, insurance etc always seem to fall through the cracks- which is bs imo) but I ALWAYS have an accountant prepare my taxes.

I don't know any o/o who has time to mess with that- and it's a real headache. Trucking taxes are the real deal- this isn't just a matter of holding back 30% and then sending that in every quarter. You'll wind up paying way too much. Plus, if you get audited, do YOU want to deal with the IRS? Or would you rather have an experienced accountant defending their own work?

A good tax accountant can advise you whether you need to incorporate (we were not incorporated for the first 5 years... until we had a massive tax bill due to a mediocre trucking accountant on that last year) and then we switched to an accountant with excellent truckign credentials who had us incorporate and that saved us tons of tax dollars. I can't really explain the details on that- but it worked for our situation. And that's the important thing- your situation will determine whether you should incorporate or not (not what other drivers tell you you should do).

Please don't fall for the idea that being incorporated will protect you in case you have an accident- if you are the one driving the truck, they can sue you directly even though you are incorporated so it's a moot point (I'll probably get an argument going now- but it's true).

Please, please, please don't jump into this o/o thing without knowing exactly what you're doing. I'd suggest waiting a few years... you'll likely find out that you make more money (to you) as a company driver than you would as an o/o. An o/o may make more gross but after expenses and taxes they generally come out behind unless they're really smart about how they run their business (and, in my experience, most aren't).

Sorry to offend anyone with that last statement, but if you'll read up on advice given here to new o/o I think you'll find that opinion is a recurring theme.

 

Agreed 100% with Tweetybird,

A good accountant is worth his/her weight in GOLD, considering the price of GOLD these days, that is a lot.

Q: Why do you think they always show the mob guys with accountants?

A: Even the criminals know how important keeping the books are.

 

Actually Tweety Bird someone can sue you twice, once as the driver and once as the corporation Been there, have the T shirt and bite marks to prove it.

 

well, that sounds like good advice. I am hauling for a guy right know that is about to give up hauling commercially. I am going to take over his hauling and add some to it. it is a local hauling gig to where we haul for the local elevators. Beans,corn, Bean mill, and or fertilazer for Souther States. The only bad part is that Southeren States Payes you a month at a time to where the other places pay per week or by the load. There is money to be made just not a lot of it but i am not in it to be a millionare just being on my on and making more then working in a factory.

 

There is no magic formula to making a go of it in this or any other business. If you want a figure to work with then I would hold back about 30%. Your self employment tax will run around 15% by itself. I don't mean that you should hold back 45% for both taxes, but 30%for both. If you are a sole proprietorship you will pay self employment tax on your net earnings. This is in addition to any income tax. Self employment tax is social security tax. It would be best to find an accountant who has trucking experience. It can make a difference when you have someone who already knows about this business. Everyone's situation is somewhat different. My taxes will be different than yours. No two people will have the same tax situation. That is why it would be good to have a tax person from the beginning. He or she can help you get things set up right from the beginning. If you have a good tax person then your tax bite should not be too great. One thing to keep in mind is this is one industry the IRS is specifically targeting.

 

GMAN is on target. He is figuring an approximate holding percentage based on NET revenue (total revenue minus expenses and deductions). Another way to estimate hold back for taxes is approx 8-10% of your GROSS revenues. A lot of accountants, including mine and ATBS, feel that after all is worked out in the final analysis you will pay approximately 8-10% of what your total revenues are in taxes. So... based on this, everytime the settlement check comes in, just take a look at what your total revenues are (do not factor in expenses) and set aside 8-10% of that amount and you will probably have the right amount available for the tax man.

As has been stated, everyone's tax situation is different, but this method is probably the easiest to get a handle on, especially for the new business owner. Let a good tax professional work out the details.

Just keep in mind that just spending money to get a deduction is not always wise. Why would you want to spend $1 to get a $.20 tax savings? Watch those expenses and try to only spend money on items that will make or save you money. Do not always spend money just to get a projected tax savings or to massage your ego. Then you will do just fine.

 

Kenny I think you're confused as to the value of a tax writeoff. It doesn't magically get you money back from the government. The only way you get money back, is if you gave them too much in the first place.

A writeoff works like this:

Say you made $140,000 in sales(gross revenue). And you spent $35,000 on fuel. The government allows you to reduce your taxable income via anything that is spent on the business.

So take that original $140,000 and "deduct" the $35,000 you spent on fuel. Now you're going to pay tax on $105,000 of income, instead of $140,000. There's nothing magical about this.

Now before you start thinking "oh great, so the government is paying for the fuel!" not so fast, in no way is anything free in business.

Your tax bill always goes down a portion of your writeoff. That $35,000 you spent on fuel might save you $10,000 in taxes(give or take).

 

great advice, i think i might have to use this guys truck that is going out of buisness for a while even though my credit is great the bank is telling me that start ups are really down right know and it is not looking good for me!!

 

I'm talking about when drivers tell you that if you incorporate, you can protect your personal assets from being sued- because they sue the corporation, not you. That's not true because, like you said, they can sue the corporation AND you. It's not a layer of protection like some guys say.