Gear up for Tax Season with These Tips

Tax season is here! For owner-operators new to filing, this article will help you know where to start and how to prioritize your paperwork. Even if you’ve been paying quarterly taxes for a while, this quick refresher will help you know what to keep front and center.

Before you do anything, make sure you know what type of entity you are because that answer will tell you when to file your taxes (yearly, quarterly, etc.). Your business is either going to be labeled a sole proprietor, a partnership, a corporation, or an S corporation. A quick chat with your accountant or review of your Articles of Incorporation can help verify this.

Once you know what type of business entity you’re working with, you’re ready to get started! Here are some top tips to keep in mind.

Hold onto those receipts

If you take away only one thing from this post, take this: the best thing you can do for yourself is to keep accurate records all year long. One of the greatest benefits of tracking your expenses is that you can write them off as business expenses on your taxes, thereby reducing your taxable income and saving money. Purchases for lodging, fuel costs, and even getting food while on the road can all qualify; as long as you have proof that you purchased the item, it becomes a work-related expense that can be deducted.

Sure, keeping records of every last expense can be time consuming — you’re not alone in feeling like it’s an inconvenience — but it’s a small part of the job that pays off big time later down the road. Even if you throw your receipts in a shoe box and manually enter it into a tracking system every Tuesday or once a month, you’ll be grateful for your efforts come tax time.

Whatever you do, don’t leave recordkeeping to the last minute. Entering a year’s worth of data at once feels overwhelming and you’ll be more prone to making mistakes or missing expenses. Make an effort to keep up on your expense records during the year and, like any habit, it will get easier over time.

Pay taxes more than once a year? Learn the rules well.

Paying your taxes quarterly can seem daunting at first and it can be tricky to wrap your head around how quarterly taxes work. One of the best things you can do as an owner-operator is visit the IRS website to learn more. Take some time to familiarize yourself with the filing process and how to request an extension, if needed.

Quarterly due dates come up fast, so something as simple as setting a calendar reminder alert on your smartphone to gather your paperwork for your next quarter can help you keep your tax payments going out on time and in the right amount. Late payments and not paying enough tax each quarter can result in penalties and fines, even if you’re on track to get a refund with your tax return at the end of the year.

Keep a list of things you can claim as a tax deduction

A little tax savviness can save you a lot of money — especially when it comes to business deductions. For instance, did you know items and supplies for your home office count as a tax deduction as long as you can show that you use your home office for business needs? How about the maintenance you have to do on your truck? Yep, that’s another deduction.

Here are some common deductions you may not have considered:

• Cell phone costs
• Fees you pay to be a member of a trucking association
• Various insurance costs
• Education opportunities or certificates that you earn
• A new set of snow tires
• Personal stuff you need for the road, such as sunglasses for driving or a nice pillow and sleeping bag

If you’re ever in doubt about whether something can be counted as a deduction, ask your accountant. You’ll be surprised how often they say yes!

In the world of tax deductions, it’s also good to know the ‘business use’ percentage for all things technological. For example, out of the many hours you spend on your personal computer, what percentage would be for business needs? Say, you use your personal computer for 70% personal needs and 30% business needs. That 30% distinction is important for your accountant to know so they can help you keep the most money possible.

Tax credits? Yes, please.

Tax credits have changed throughout the years. For example, COVID-19 introduced a few tax credits to help business owners weather the economic fallout from the pandemic. While not all of these are around anymore, it was a lesson to all to carefully review what tax credits you could qualify for on a yearly basis.

For example, do you regularly give to a certain charity? Keep those receipts because those can be a tax deduction. Or, if you had a vehicle you paid taxes on that got totaled, stolen, or sold during the year, you could get a tax credit for your loss. There are all sorts of tax credits available for various situations. Take time to look them over and find out which credits you qualify for.

Find a good accountant

An accountant can be a great asset to you throughout the year. They take care of all the heavy lifting to help you save as much money as possible and get everything submitted on time.

Though they do a lot, you will still have to do a little bit of work before they can take over. The best way you can help them is by organizing your paperwork and making sure you’re sending the right documents their way. This could include a balance sheet, purchase records, sales of any assets, and your total income and expense sheet. It’s also wise to include any significant business changes that have happened since the last time you filed.

The best time to find a reputable and reliable accountant is before tax season begins. Establish a relationship with them early and use the time to help them understand your business. Don’t be afraid to ask questions; after all, they are there to help!

If you’re on the lookout for some help with your taxes this year, be sure to check out our Trackin’ Assets Accounting Services. Here you’ll get the best of both worlds with certified accountants who also know the trucking industry. Get expert advice on record-keeping, deductions, tax help and more, plus we can also run your payroll for you. Let us do the heavy lifting for you this year so you can focus on growing your business as a successful owner-operator.

Motor Carrier HQ trucking authority is with you every mile of the drive, whether that’s to offer help on taxes, licensing, or safety regulations. Check out the Haulin’ Assets podcast to connect with like-minded folks from the industry and come back for more news and tips to help your business succeed.