Tax Question for drivers of owner operators.

[LDB]

Getting more focused on topic, let me add this. I saw mention of tax preparers which my dictionary defines as the national chain places. I also saw posts saying use a CPA without specifying they must know the trucking business.

We're talking about the life of your business so think of it in life and death terms. If you knew you needed heart surgery to live would you go to your friend/neighbor/online do it yourself software source? Those are the most basic and least expensive options for taxes as well. Would you go to the pharmacist? He's got some training and knows most of the terms. That's the national chain tax preparer. Would you go to your dermatologist? He's a doctor after all. That's the generic CPA. Or would you go to the cardiac surgeon? That's the CPA like John Turner who specializes in trucking and knows all the ins and outs.

Leo Bricker, 73's K5LDB
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[drivingmecrazy]

See I was thinking because we are the DRIVERS- not the owners of the truck- that taxes might not be so in depth for us... but after reading everyones posts- I think we will spend the money and get a trucking tax specialist. Does anyone do the scanning of receipts to John T ? I think I saw where it was 85.00 dollars a month- but sure does sound great! Thanks again. If you don't ask... you won't know!

 

[greg334]

Taxes are Taxes, whether you own the truck or drive it. There has to be some realistic planning on how you are paying them and when.

As for LLC (s corp too) and cap gains, regardless what people think if you take a chance on using the LLC (s corp too) to avoid paying taxes, you may get really dinged on doing this. There is a general rule that you take 2/3rds of revenue after paying the bills as payroll and what is left as cap gains. The IRS does not look at 2/3rds of a cap gain payout as using the coprorate vehicle as a form of a tax shelter. It is a lot more complicated if you drive the truck. Once you go through the audit process and get dinged by an auditor who has had a bad day of needing points, your fine may be more than the taxes were in the first place.

So if your CPA or tax preparer says to do it this way, get a second opinion.

 

[LDB]

If you pay for 6 months at one time then you get a scanner from John at no extra charge. Your other option is to buy one of the all in one units and then you can scan, print and copy in the truck when needed.

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[greg334]

Leo,
Does mr. turner handle your stuff?

 

[TeamCaffee]

John Turner does handle our taxes.

 

[LDB]

Yes, as of last year's taxes, when my CPA friend passed away before being able to do them, I switched to John. I am very satisfied with his work and will have him do my taxes till one of us retires.

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[Crazynuff]

You don't necessarily need a CPA but be certain the person is an enrolled agent http://www.naea.org/MemberPortal/ .
Another note on LLC's . Most states won't recognize an LLC and will require you to register in their state as a foreign LLC . The fees in some states are quite high .

 

[jaminjim]

Did I read that right? $1,020.00 per year. With a large part of that being clerical. Sounds like a real deal.

 

[LDB]

>You don't necessarily need a CPA

No, as I mentioned in another post, you can use your dermatologist for your heart surgery or brain surgery if you want to.

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[LDB]

Is it expensive? I guess that's relative to how you value your own time as well as the results. As an experiment, I did my own taxes using one of the nationally known computer programs. I had them done by John because I know better than to do my own surgery or go to the pharmacist for it. Anyway, even with some accounting background and prior knowledge, I came out over $5k in the hole compared to the results with the correct professional doing the job. I also didn't spend a few hours a month doing clerical work. What's worth it to me won't be to someone else but I find it very inexpensive comparatively.

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[tallcal101]

From day one I knew I did not know a thing about transportation tax law,or how it related to the "S" Corporation I set up.
I just knew that I was not interested in getting audited.
I hired an accountant(CPA)who specialized in transportation,who is also a practicing tax attorny,IRS certified.Granted,he was not cheap,but when I filed my tax's,his name and title and various credentials were all over the forms.I felt safe behind the wall of credentials he was able to put up.I slept better with the knowledge this one was thing I did not have to worry about.

 

[TeamCaffee]

We feel as if John Turner is worth every cent we pay him due to the fact he stays current on the tax laws that affect the trucking world. An accountant that does businesses and does not specialize will not know of all the loopholes a specialist like John does know. Money well spent.

 

[jaminjim]

Leo, not trying to be a wise guy, (well maybe a little) I would think that most expediters have the one or two hours a month to properly categorize the receipts. Not saying that you should do your yearend calculations, but come on $85.00 to put the stuff in order.

Maybe a good accountant would provide a woorksheet for his customers to input the info. Do you really think that most CPA's sort thru your stuff? Most worth there salt review what the bookkeeper did.

 

[greg334]

LLC not being recognized in other states?

Well other states don’t recognize regular companies, s and c corp too.

It doesn’t matter when you don’t sell or provide primary services in other states. We are talking about interstate commerce that is covered by many different laws here, not cleaning sewers out in Ohio by a Michigan company. Registering your LLC in every state you travel in is a waste of time and if you set your situation up with the right CPA or lawyer, ask him/her the question on the New Jersey issue.

Also $1500 sounds like a lot of money, so does $85 a month at least to me. I can understand paying $450 for a tax return but I don’t think that the $85 a month to put in receipts and produce a P&L is worth the money unless there is a few phone consultation sessions per month as part of the package to guide you to a better P&L or getting ready for a tax return.

I look at a CPA as a paid advisor, being one who used accountants (interchangeable with CPA) to advise me on this or that issue to lessen my tax burden or make a better business decision.

I am replacing Quick books with Microsoft accounting because of the price – free. It seems to be doing everything Quick Books does for me now, so why not?

 

[jaminjim]

Saying that a CPA is the only way to go is akin to saying that only class A cdl holders are the only ones that can competently relocate freight.

 

[greg334]

What I am saying jaminjim is if you are starting out or having tax problems or want to really get into this as a business (fleet owner, etc..), the CPA's advice is what you need to start with. Many go to tax preparers and expect them to know answers, they don't - they are trained to advise but to prepare taxes.

Some tax preparers (like financial adviser) don't know the difference (or the ones I used in the past) between accrual or cash accounting and which one will be the best for your situation. The same goes for LLCs and S corps, many are sold that LLCs are the best for the small owner but I found in many cases, I have less of an exit strategy if I follow some advice I have been given about LLCs.

This does not mean that once you pay the CPA to get you going, you can't leave them to reduce your cost and only deal with a tax preparer.

 

[jaminjim]

Greg, we agree.

 

[LDB]

I disagree. many can get freight from point a to b. The differentiation is when it's a third of a million dollars worth of high tech gear or a $50k hospital bed or a few million dollars worth of artwork. Then the ones who were fully competent for the crates of Alpo either aren't competent or aren't properly trained or equipped.

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[LDB]

You can go to the pharmacist (tax preparer) to ask advice about your new symptom that's popped up since your last visit to the specialist (CPA) and save some money or you can continue to use the services of the one who is properly trained and completes the needed continuing education in the specialty field your condition pertains to (trucking related accounting/taxes). It boils down to price versus cost. The first year I switched to the CPA I got an additional refund of more than $2000 compared to the tax preparer. I could have saved a few hundred by using the "money saver" so it really would have only cost me an extra hundred a month or so to "save some money with a tax preparer".

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