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Invoice for trucking for Management

hey what's going on everybody my name is Zach pascarello and I had a trucking company for the past two years and primarily I am a bookkeeper and accountant so I do QuickBooks consultations I do full service bookkeeping and I do taxes for about 30 small businesses I service a lot of trucking companies but I also do Real Estate Investors restaurants software companies advertising agencies I do a large variety of bookkeeping for different companies in this video I want to talk about a couple things that I see a lot of people do incorrectly specifically with like their bookkeeping and their taxes and just generally with their business and all of these are going to be specifically related to trucking companies but even if you don't have a trucking company some of these tips and tricks will still be applicable to your business okay so I want to talk about acquiring assets so what does that look like on your books whether it's an asset or a liability or both even if you're leasing particular equipment and then also putting your personal money into your business so owner's investment this typically happens in the very beginning before you even have a business checking account how do we account for that can I still write that off is that still a tax deduction and then whenever you're just starting a business timing is really important especially whenever you have to buy an expensive piece of equipment like a truck so I'm going to talk about the perfect time to do that and then how to do that whether you're spending cash or getting a loan and then finally the fourth thing I want to talk about super specific to trucks specifically CDL Trucking is how to file your ifta taxes so if the taxes are due every quarter so it's January right now so your quarter for 2022 if the taxes are due and I briefly want to touch on how to do that okay so the first thing I want to talk about is buying the truck this will probably happen in the beginning of your business or if you're lucky you're going to get a second and third truck after you've established your business and even if you don't have a trucking company any business might acquire a particular asset so if you are a real estate investor you're obviously acquiring real estate houses or if you are like a general contractor and you might be acquiring some sort of piece of equipment or if you're a manufacturer maybe you have some expensive Machinery in your manufacturing plant whatever your business is you're probably going to acquire assets at some time so I want to talk about that real quick and this actually applies also if you're doing a lease to own so lease to own that happens a lot with vehicles lease to own should be accounted for the same way as purchasing outright so you want to add the asset on your books I see all the time people will make their monthly payment for their loan and they'll just categorize that as an expense in real time and that is not the correct way to do it so I actually have a QuickBooks course for trucking business owners and I'll link the QuickBooks course in the description below I talk about this in a little bit more detail in the course but I want to talk about it real quick right now so as soon as you buy a truck you're obviously going to have a bill of sale and then more than likely you're not going to use your you're not going to use straight up cash to buy the truck you're probably going to take out a loan to buy that truck so you want to keep your bill of sale and you want to keep your loan origination document so whenever it's time to do your bookkeeping or your taxes you have that information so whatever the amount of the truck on the bill of sale that's going to be the asset and then whatever the loan origination document says is the original amount of the loan that's going to be your liability your long-term liability on your books so you're going to add an asset and you're going to add a liability on your books and then more than likely there's probably going to be some difference between the asset and the loan because you probably will have paid a down payment so whatever that down payment is add that to the liability so if you spent fifty thousand dollars on a truck and you paid a ten thousand dollar down payment you're going to have a fifty thousand dollar asset of the truck and then you're going to spend ten thousand dollars of your cash and then you're probably going to have a forty thousand dollar loan so forty thousand dollar loan plus the ten thousand dollar down payment on the truck equals the total value of the truck at fifty thousand dollars now you're going to want to do two things on a monthly basis whenever you're accounting for these assets first you want to capture depreciation a lot of vehicles depreciate over five years but tractors like CDL trucks they'd appreciate over three years trailers to appreciate over five years just like Vehicles so you want to take the purchase price of the vehicle so for this example the truck that cost fifty thousand dollars divide that by five and that is your annual depreciation so every year you will take a depreciation expense of ten thousand dollars for that truck and then you have the loan payments so like I said in the beginning a lot of people take those loan payments like you know maybe you're spending a thousand bucks a month on your forty thousand dollar loan and they just say that is their vehicle expense but that's not the correct way to do it so you take depreciation of the truck and then you pay off your loan so that one thousand dollars goes towards your loan and then the final step is you need to split the interest and the principal on the loan so you're paying a 1000 bucks every month maybe just to keep a simple eight hundred dollars is going towards the actual loan and then 200 is going towards interest so that interest expense and your depreciation expense is how you get the tax deduction is how you write off the purchase price of the truck and also the money you're paying back to your loan the the actual the total one thousand dollars in and of itself is not a business deduction it's not a tax write-off you're just paying back your loan the depreciation and the interest are your deduction those are your expenses okay next I want to talk about putting your personal money into your business so I see a lot of people whenever they start up they might spend maybe a hundred dollars on a consultation to talk to a bookkeeper or an accountant or an attorney or you might just be buying job supplies maybe you got a DAT load board subscription maybe you paid for your boc3 and your UCR with your personal money maybe you've got a pallet jack whatever there's a million different things you could potentially purchase in the beginning of your business in the startup stages and you might be using your personal money before you get a business checking account which is totally cool like that's totally acceptable and that is a legitimate business expense as long as what you're buying is necessary and ordinary for your business it's totally allowable to write that off you just need to keep track of it so if you let's just say you spend you know ten thousand dollars of your personal money on your business that would be considered owner's investment and then you can also capture that as an expense so what I see a lot a lot of times happen is people like in September or October they'll start a business and then they won't really make any money so it's like oh I don't need to file any taxes because I didn't make any money but in reality you spent thousands of dollars so you still want to file your taxes as soon as you start doing things with your business like as soon as you start spending money file your taxes even if you only spend a thousand dollars in December you can still capture that loss that one thousand dollar loss and that'll offset your income in the future so owners are investment in the beginning of your business perfectly legitimate business expense make sure you file your taxes even if you don't make any money Okay the third thing I want to talk about is whenever you're starting the business you want to wait until a good time to buy your truck so I know you might end up waiting forever for the perfect time you're never going to find the perfect time but you want to find a good time to start your business and typically what I see if you're starting like a box truck business or if you're an owner operator with a tractor trailer about ten thousand dollars seems to be like that good sweet spot amount of money to start your business and for this particular example all trucking businesses are going to start with getting a truck it's really important that you save your cash because during your first year of business you are probably unless you buy a brand new truck and even if you buy a brand new truck you're going to have a lot of expenses you're going to have a lot of out-of-pocket expenses if you're a real estate investor you're probably going to have to repair your house like you don't want to spend your last dollar just to get the truck you don't want to spend your last dollar on your first property you don't if you're starting like an online coaching business you don't want to spend your last dollar on that that online coaching course to learn how to be an online coach like you want to start your business with a decent amount of cash readily available so that's why it's really important to try to get a loan for your truck try to get a good interest rate anything less than eight percent in today's market is probably going to be a decent interest rate I've seen some loans as low as like three or four percent on a truck if your credit score is decent and if you have good history you might be able to get something you know four or five percent but anything less than eight percent is a perfectly good loan try not to spend even if you have twenty thousand dollars in your bank try not to spend straight up cash when acquiring assets always leverage credit because you want to save your cash because you you don't want to rack up a massive credit card bill because credit card interest I promise you will be more than eight percent so try to get a loan to acquire your assets save your cash also along the those lines look into business credit cards if your credit score is decent like above 700 you will probably be able to qualify for a pretty good business credit card that's what I did for the first two years in my trucking business I got an American Express credit card and it had zero percent interest for the first 12 months so I you and I got like an 8 000 credit limit so you can basically use that as like a free eight thousand dollar line of credit zero percent interest for the first year just make sure you have enough money to pay that off at the end of the 12 months because if you don't the credit card company will charge you interest accrued for the past 12 months but if you are able to manage your finances appropriately then that might be a good option for you because insurance is expensive fuel is expensive and repairs are expensive so if you can get eight thousand dollars zero percent interest that might help kind of float your business along for the first year or two and then the second year I did it again I got a Chase credit card I paid off my American Express credit card and I got another eight thousand dollar credit limit on a Chase credit card and so I just did that for the second year got another eight thousand dollars basically for free and then I paid it off a year later okay the last thing I want to talk about is how to file your ifta I know there's a lot of accounting firms and a lot of trucking consultation advisory services that offered to follow your ifta for you you really don't need to pay anybody to file your ifta I promise you it's super simple you only need two things you need the miles you drove and the gallons you pumped and you can get both things probably from either your ELD or your fuel card that's why it's really important to first of all definitely use an ELD because you need to use an ELD per DOT compliance and as long as you're using your ELD everywhere you drive like I know for go motive there's like a little tab on the left hand side whenever I log into my computer it says fuel you can go to compliance you can go and there's literally a tab that says ifta like I click on ifta and I go October 1st through December 31st and I can look at all the miles you just need to know what miles you drove in what state I promise you if you have a legitimate ELD guarantee you can get that information straight from your ELD everyone's different so I don't know if you don't have go motive I don't know exactly how you do it but I promise you just log into your online portal with your ELD and I guarantee you you can get how many miles you drove in which state so you just need to do it on a quarterly basis so it's January right now so you need to file ifta for quarter four October November and December so just get the miles you drove in each state get that from your ELD and then that's why it's important for your fuel card I know like some people use a bunch of different field cards that can get kind of complicated like if you're using three or four different fuel cards some fuel cards might offer like a really good rate at loves or TA or Petro or Flying J people might be chasing those discounts just to get that extra 30 cents off per gallon and that's great but keep in mind like I see this a lot with people that have multiple credit cards multiple checking accounts multiple fuel cards it just makes everything a little bit more complicated so make sure you're really chasing a discount and that it's worth it because if you have multiple cards bookkeeping is going to be more complicated you might miss payments you might pay interest pay late fee is on missed payments you're getting in all these statements you got to manage all these cards like it does definitely make things more complicated so if naturally you're an unorganized person might not want to have five or six different credit cards and three four four different field cards three different checking accounts just keep it simple one checking account one or two credit cards one fuel card that way whenever it's time to follow your ifta you just log into your field card and you can pull up a report and your field card will tell you everywhere that you pumped diesel for the past three months and then you can just export it to an Excel file throw in a quick pivot table and sort by state so you can just say like all the gallons I pumped in Pennsylvania all the gallons I pumped in Texas all the gallons I pumped in Illinois and then you go to your the final step once you have the miles pumped in every the miles driven in every state and the gallons pumped in every state you go to your Department of Revenue website this is probably the most complicated step but if you're like me I had a representative from the Pennsylvania Department of Revenue literally reach out to me and calling me be like hey I see you just got an ifta license an account do you need any help setting up your online portal to file your ifta and I'm relatively computer savvy so I didn't need help but I could see if it's your first time it might be a little bit complicated but I'm sure whatever state you live in probably has some type of brochure or online account so whenever you filed for your ifta license or your ifta account there's probably some instruction manual that comes along with that filing and explains how to log into your account so once you have your miles once you have your gallons once you know how to log into your online portal for your department of revenue for your if the filing that's it all you do is just it's probably just like uh answer a couple questions enter in your numbers and then you hit submit it's usually like 100 to 300 per quarter per truck depending on where you pump and where you drive but with all that being said don't pay somebody hundreds of dollars to file ifta for you it's really not that complicated you can probably do it yourself