March 14, 2022
6 Tips for Keeping Clean Company Records
Clean company records are a necessity in the trucking industry. With the sheer volume of federal regulations, licenses, and safety procedures needed to operate a shipping business, it makes sense that keeping accurate books is a priority for all (especially with the constant threat of a random DOT audit looming overhead).
Fortunately, the DOT’s expectations for adequate company training and documentation are not a mystery. With the proper tools, keeping clean records can be a relatively simple practice. Here are six tips that will keep your paperwork organized and your trucking business’ bookkeeping protected from legal scrutiny.
1. Keep Every Receipt
The no. 1 rule of smart bookkeeping? Don’t throw anything out.
When it comes to the business of trucking, your company records need to be precise. The International Fuel Tax Agreement (IFTA) requires exact figures for miles driven, just as the Federal Motor Carrier Safety Administration (FMCSA) needs accurate documentation of a driver’s hours of service, CDL driver qualifications and license requirements, and required truck repairs and maintenance.
The better your business becomes at holding onto its receipts (no matter how inconsequential) and logging daily activities, the more prepared it will be for a random spot-check audit. The following documents should all be kept somewhere safe and secure (ie. not jammed somewhere deep in a glove compartment):
- Rate Confirmations
- BOLs (Bills of lading)
- Log sheets & books (For at least 6 months)
- Settlement sheets
- Financial statements
- Tax records & returns
- Insurance policies
- Medical certificates
- Truck maintenance and service records
There are some great apps out there that allow you to scan and save documents using your phone’s camera. One I have had a lot of luck with is CamScan.
2. Make Record-Keeping Part of Your Daily Routine
It should come as no surprise that your business needs to keep documentation clearing your drivers and vehicles for active service on file. That means proof of insurance, licenses, relevant medical certificates, driver safety history and tracked hours of service, not to mention any necessary vehicle markings and inspections needed to safely transport specific goods (including hazardous materials).
Locating these documents all at once in the event of an audit will likely prove a difficult task. Make a habit of updating records daily so any missing information can be identified (and tracked down) immediately before key documents are misplaced or thrown away. Retroactively tracking expenses is an especially challenging and time-consuming job. Taking a few minutes each day to record even minor expenses while they’re still fresh makes life much simpler.
3. Understand What Documentation is Needed
The DOT has compiled nearly 30 pages of forms and explanations detailing the exhaustive list of documentation you’ll be expected to produce in the event of an audit. On the surface, this can appear excessive (it’s not a very exciting read, we admit) but it pays to know what you’re expected to keep on record as a business. For simplicity’s sake, here are some of the more common DOT requirements in a more easily-digestible format:
- Driver List
- Driver’s License
- Driver’s Records of Duty (ROD) and Supporting Documentation
- Driver’s Motor Vehicle Record (MVR)
- Medical Certificate
- Vehicle List
- Vehicle Inspection
- Maintenance records
- Hazardous Materials (HM)
Shipping Papers Carrier/Programmatic Related Documents
- Proof of Insurance
- Drug & Alcohol Program
- Accident Register
- Bills of Lading
4. Have a Dedicated Bank Account for Business Expenses
This is more a general rule for any business operation than a trucker-specific tip, but it’s an important one nonetheless. Not only will a dedicated business account make tracing your business expenses a breeze, but it also protects your personal assets. In the event of a lawsuit, bankruptcy, or other legal trouble, dividing your business finances from your personal accounts can prevent the seizure of your personal savings and negative effects on your credit score.
You and your business should be separate in the eyes of the law, which is most easily proven if you’ve established your business as its own entity. Always use your business account for any purchases related to the company, including insurance payments, fuel, and mechanical repairs.
5. Understand How the IRS and DOT See Your Books
The whole idea of keeping clean company records is to have detailed information on your business’ every move, both for your sake and the sake of the regulatory bodies that like to check in from time to time. In the eyes of the IRS and DOT, any necessary expense, mechanical repair, or shipment issue that isn’t dutifully noted in a company’s books essentially never happened.
Compliance and New Entrant audits make up the bulk of DOT auditing activity, but it’s important to be prepared for security and hazardous materials audits as well. You can have the best training processes for the best employees in the whole transportation industry, but failing to organize your records confirming your company’s compliance with federal regulations will render those advantages moot. Always remember: if it’s not in the file, it didn’t happen.
6. Use Bookkeeping Products Designed for Trucking
One of the advantages of working in transportation is the availability of resources specific to the industry. When it comes to keeping clean records, skip generic accounting software and instead seek out products engineered for truckers. Particularly if paperwork and accounting software is your idea of a complete nightmare, your company will be better served by products built for trucking compared to a generic program.
Maintaining clean records can be a simple job, so long as it remains on your daily priority list. With these tips in hand, your business can be better prepared for any potential scrutiny — legal or otherwise.