May 2022 – Every business’s most significant issue is taxes. Not only is it challenging to keep track of everything, but it is frequently more expensive than anticipated.
To avoid such annoyances, the experts at Simplex Group recommend considering some additional ideas and methods that can help you save money on taxes for your company. Here are some tax law tips for your trucking company to consider in 2022.
Keep Detailed Records
Planning ahead by keeping accurate records throughout the year is the best way to get ready for tax season. It may take a little more time after each journey, but more efficient tax preparation will pay off in the long term.
Begin by keeping your personal and professional credit cards separate. This will make tracking your business spending as an owner-operator easier. Keep receipts for all deductions, beginning with the per diem tracking system. If you don’t keep track of your costs, you won’t be able to claim them as deductions, so don’t let a lack of paperwork result in an extra tax or a problematic audit.
Keep track of your costs and receipts, including tolls and scales, which may be automatically charged to your credit card. It is a good idea to note any special conditions like the Covid relief amount received.
Estimate Payments Quarterly
Making quarterly scheduled tax payments is another efficient method to avoid an unexpected tax bill. These are usually between 20 and 30 percent of the preceding quarter’s net profits. This is not just smart planning, but it is also a tax rule that must be observed. When you submit your 1040 form at the end of the year, you’ll also use these quarterly profit projections.
Gross compensation as reported on the 1099-MISC minus permitted business expenditures = net profit is the profit calculation to use.
Manage Your Staff Effectively
Drivers and operators will record their earnings on various forms; if you’re unsure about this, it is advised to consult the IRS or a tax consultant. Truckers can and should deduct their cell phone, internet, and license renewal costs from their taxable income.
They can also deduct required medical exams, truck repair and maintenance, association dues, and food consumed while on the road. They can also deduct job-related personal products like food storage, logbooks, flashlights, and electronic equipment like a GPS.
Always be Prepared for a Safety Audit
According to the IRS, 4% of tax returns submitted by self-employed individuals earning at least $100,000 are given particular attention. While the chances of an audit aren’t high, it never hurts to be prepared, especially because preparedness is an essential part of good record keeping. Two of the best preparation methods are keeping seven years of tax information (including bank records) and having a printed copy of your driver’s logbook or per diem bills.
Make sure you download and print your logs regularly to have the information you need when the time comes. Records expire after six months in most ELD software; therefore, download your logs every month as part of your record-keeping procedure.
Keep in mind that being picked for an audit does not indicate you’ve done anything illegal; it just means you’ve been marked for further investigation.
Make Necessary Business Purchases Ahead
If you are worried about your forthcoming tax bill, you might want to make some purchases in advance to save money and be prepared. It may be worthwhile to purchase a new truck or piece of equipment for your business before the year closes if you require one.
Because of the depreciation laws, purchasing equipment for your business may help you to lower your tax obligation. You can include prepaid tires, prepaid license or insurance, office supplies, and day-to-day living things kept in your vehicle.
Invest in an Individual Retirement Account
You can contribute up to $6,000 per year to all IRAs in your name, plus an extra $1,000 if you are over 50, for a total of $7,000 each year. These donations must be received by April 15th, 2022. Contributions to a typical IRA are deductible for federal income tax purposes.
A simplified employee plan (SEP) or a savings incentive match plan for workers are two other retirement plans to which you can contribute.
An SEP comes with its own set of restrictions, so if you have workers, make sure you’re familiar with them. If you are the sole employee of your business, you can contribute up to $57,000, or 20% of your net self-employment income.
About Simplex Group –
Simplex Group is the most complete premier service provider for America’s trucking industry. The company support customers in achieving their goals, and commit to help partners and communities thrive.
Simplex experts take care of compliance, permitting and tax reporting. The Freight4U division assists customers with freight planning and factoring services and Simplex Insurance division provides them with coverage on any unexpected circumstance they may face along the way.