This dreaded time of year comes up every year the same time and is one of those areas that most people try to avoid. Whether driver or owner operator it is important that you keep on top of your tax obligations so they don’t come back and tap you on the back of the head in the form of an audit. There have always been some guidelines that you should follow throughout the year but changes in technology and processes for drivers may change the way that you keep those records.
As an owner operator it is important that you don’t wait until tax time to find out how your business is doing. You should have an idea on how your business is doing at all times during the year so you can make adjustments to your operation as required. This is also a good time to talk to your accountant about how your business setup is affecting your tax rate and what changes should be completed to give you the best tax break for your business. Hopefully you have been organizing receipts throughout the year with a proper bookkeeper or software. Having your accountant complete this for you can cost you hundreds of dollars that could be better used somewhere else.
As a driver you may be running on the per diem method of claiming meals if they are not reimbursed by the company you work for. Making sure that you get the form completed and signed is important. Once you have decided to claim that way on your taxes, remember that your log sheets now become your back up material should you go through an audit. You have to keep those log books for seven years. The six month rule for log books is just for safety purposes and not for tax purposes.
This is where things may have changed for you. If your company has moved from paper logs to electronic logs you still need to keep that data for seven years to support your meal claims. Have you been printing it off every week when you return or have you downloaded the data on to an external drive? If not, you had better get to it. You never know when you will be called up for an audit. If this is an area that you struggle with each year, now is the time to get organized. It may be too late for this year but you can be ready for next year. Create a system for storing your supporting materials. Take a look at your tax implications and talk to an accountant about how you can lower your tax rate and save more money. Look into company benefit plans and see how you can benefit from options available to you. It is amazing how many people don’t take advantage of plans that will actually give them free money. We all try to avoid talking taxes but it may be the most important conversation for this time of the year. The question is are you ready for that conversation?
About the Author
Bruce Outridge has been in the transportation industry for over 30 years and is author of the books Driven to Drive and Running by the Mile. Challenger Motor Freight Inc. is one of Canada’s Best Managed Companies (platinum member) and is looking for quality team members. To learn more about opportunities with Challenger visit their website at www.challenger.com