Running a trucking business can be one of the most lucrative businesses going, but trucking is highly regulated by both the federal government as well as many states. You have to be prepared and know what you have to do to keep on top of it all.
How to Keep Track of It All
Keeping track of all the requirements, trucking permits, and taxes is not an easy matter, which is why most trucking companies contract out to companies such as Trucker’s Bookkeeping Service (TBS) who can keep track of everything for you. Rather than keeping a single clerk in your company dedicated to just keeping you legal and on the road, a bookkeeping service, such as TBS, can do the job for a much cheaper price. And remember, tasks such as failure to complete your biennial motor carrier identification report can possibly result in the deactivation of your US Dot Number (which means the grounding of your trucks) as well as possible heavy fines. Keeping track of permits and taxes is not a task to be taken lightly.
Failing to get all the necessary permits required and to follow the necessary regulations can lead to total stoppage of your trucking business mid-stream, not to mention heavy fines (up to $1,000 per day or more) and significant tax levies for failure to pay road taxes on time. Here are some of the necessary papers a trucker needs:
1. A U.S. Department of Transportation number through the Federal Motor Carrier Safety Administration
2. A motor carrier number through the Federal Motor Carrier Safety Administration
3. Proof of insurance that is filed with the Federal Motor Carrier Safety Administration
4. A designated process agent is chosen: A process agent is someone an individual entity can serve legal papers from. Let’s say, for example, that you drive through New York State, and have to pay a fuel tax, but you are based out of Louisiana. A process agent is someone the State of New York can file the papers with. The agent guarantees you, as the owner of the trucking company, will receive it.
5. Completion of your United Carrier Registration: This is a federal program designed for truckers who perform interstate trucking to register their trucking business within the individual states affected.
6. Completion of your Form 2290: This is a tax form used to calculate and assign your Federal Excise Highway Tax if you operate a truck greater than 55,000 pounds on the highway.
7. An Employee Identification Number: This is 9-digit number obtained from the Internal Revenue Service to designate the taxes for your trucking business.
8. IFTA Permit: IFTA stands for The International Fuel Tax Agreement. Driving in most of the United States and Canada, you may owe fuel tax. The IFTA is a way to assess those fuel taxes. You must report quarterly for the proper assessment.
9. Weight Distance Travel Permits: If you travel with your truck in the States of New York, New Mexico, Kentucky, or Oregon, you will be subject to Weight/Distance tax in those jurisdictions and must have an account within those states to assess and pay the tax.
10. State Trucking Jurisdictions requirements: Various states may have their own trucking jurisdiction requirements.
Why Computerization and Managed Services Make Sense
Using a managed truck bookkeeping system makes sense because it’s just part of the larger whole. According to the article in businessingmag.com, Overcoming the Challenges of the Trucking Industry, keeping a computerized spreadsheet of diesel prices for your trucks can make a major impact on your profit margin. For example, diesel prices currently vary in Austin, Texas from as low as $2.55 a gallon to as high as $2.78 a gallon, which means a fill up of 200 gallons of diesel could cost you nearly $50 more. Another key element is ensuring that trucks have regular preventive maintenance to prevent costly breakdowns during a trucking run.
Despite the many challenges, more and more people open up trucking companies each year. Trucking can be a lucrative business if operated correctly, but vigilance and competitiveness are key.