“Wait a minute. It’s August, and I’m mentioning that word—TAXES!”

Yes, because if you don’t have them on your mind through the year and only think about the shoe box of your receipts in late March or April of 2010, you will be so far behind the eight ball you won’t be able to read its number.

As a small business owner, your most important plan is not how you’ll purchase your next tractor or trailer. It’s your income tax plan. Yet most small trucking companies don’t spend the necessary time learning how to get their taxes under control.

The words “tax planning” have become associated with the wealthy, but certainly not for small motor carriers, right? Wrong! If you pay taxes, you need tax planning. If you only visit your tax advisor in April to get your taxes prepared, what can he really do for you? When the tax year has closed, you can’t spend or shuffle money around for tax advantages.

You should have both a short-term (12 months) and a long-term (3-5 years) plan developed by a professional tax planner. A good planner saves you much more than his fee - which of course is tax deductible.

There is a difference between a ‘tax preparer’ and a ‘tax advisor’ or expert:

• A ‘tax preparer’ receives payment for professionally preparing income tax returns. Anyone can become a tax preparer by taking a short course and passing a test. This type of tax preparer is not qualified to interpret the tax code.  
• There are three types of professional tax advisors or experts: CPAs, Enrolled Agents, and Tax Attorneys. As a motor carrier, it's very important for you to locate an expert in trucking business tax issues and regulations. 

What to look for in a sharp Tax Advisor:

1. Experience—How long has he worked with motor carriers? What’s his educational background in accounting and taxes?
2. Full Time—Does she have a 12-month practice? You need advice all year from the person who’s going to prepare your tax returns.
3. Audit Experience—How often does he represent a client before the IRS, and does he back up the returns he’s prepared? When was the last audit in which he represented a client?
4. Creativity—Does she understand the tax code so she can push the envelope, but not create a tax penalty risk for her clients?
5. Aggressiveness—Is he willing to argue his interpretations of the tax code before an Auditor?
6. Continuing Education—Does she take several hours of tax-code classes annually to be sure she understands all changes made that year?
7. Stability—Where is he working? How many clients does he have? How many long-term clients are motor carriers? Does he have a Dunn and Bradstreet® rating?

It’s not just the letters that follow a tax advisor’s name which qualify him to be your tax expert; it’s his knowledge of the trucking industry and how it relates to the tax code. Finally, you can have the most qualified trucking tax expert in the country; but unless you provide him with complete expense and income records, no talent, knowledge or skill can produce the results you need.

One last note: if you haven’t already had your tax strategy discussion with your tax advisor, as you set this article down, your first item of business is to make an appointment with him before 2009 ends, to be sure you’ve done everything possible to save on your tax bill. When January 1, 2010, arrives, it will be too late.  

Good loads and safe roads, everyone.

Timothy Brady
©  2009