Starting your own trucking business is an incredibly exciting feat; you can find financial freedom, you can choose your own schedule, and you have the ultimate say in what your day-to-day life looks like. However, as any business owner knows – a lot goes into getting a new business up and running. Owner-operators are in charge of daily operations, establishing budgets, finding clients, purchasing equipment, and much more. Long story short, as a trucking company owner, you’re putting a lot of effort into growing your business.
Because the costs of running a trucking business are high, it can be tempting to skip out on “extra” expenses that make life a little easier such as trucking tax services. All business owners can get distracted by the “can of beans” scenario. This is where a can of beans at one grocery store is $1, and you know it is 50 cents at the store across town. From a financial perspective, it is unfruitful to drive 10 miles to save 50 cents – even when the principle of paying double is difficult. Who wants to pay double for anything? The can of beans simply demonstrates the importance of keeping costs in perspective. It models the cost of paying double versus the cost of driving to a location much further away to save some money. There is also a principle of getting what we pay for. This is particularly important with business expenses. Imagine the total cost to a trucking operation if a cheaper maintenance service was selected, but the work only lasted half the miles compared to the more expensive service.
The question you should be asking yourself is, how much is your own time and energy worth to you? In the case of business functions outside of your expertise, DIY is often a far less efficient use of your resources. Compared to the unavoidable costs of running a trucking business, the costs of trucking tax services is rather inconsequential. The time it’ll save you when filing your IRS Form 2290 is well worth a small fee, not to mention avoiding issues with the IRS that could arise from mistakes that more commonly occur filing paper returns.
Like with most businesses, running a trucking company is… expensive. While every company’s expenses will look different, according to Truckers Report, it costs an average of $1.02 per mile to operate a single commercial vehicle (excluding driver salary), which equates to roughly $133,000 a year. Here’s how they break that number down:
As much as $0.54 per mile come from fuel costs. A commercial truck can use over $70,000 worth of diesel a year, which isn’t all that surprising when you take into account that a commercial vehicle can consume 20,000 gallons or more of diesel a year, approximately 41 times the amount of fuel a standard car uses. Given the instability of fuel prices, this cost can vary significantly from what was reported at the time of this study.
As the owner of a trucking company, the equipment you have to purchase isn’t limited to office supplies and a coffee maker. As one may assume, trucks are essential to a trucking business, so you’ll have to budget accordingly, as buying a commercial truck is a big investment. According to the Truckers Report, new trailers cost around $50,000, and new cabs can cost well over $100,000. If you were to pay one-fifth of the cost of a new cab and trailer annually, that would add up to $30,000 a year, $0.24 per mile.
Class 8 vehicles commonly travel in excess of 100,000 miles each year, causing them to experience a good deal of wear and tear. Batteries die, tires become underinflated, brakes wear down, and truck owners have to pay for repairs to keep their vehicles in good working condition. These repairs can easily add up to $15,000 annually, or $0.12 per mile.
Driving long distances has an inherent risk, so insurance is an absolute necessity. However, the more insurance policies you have, the more you have to pay, and there are over 9 types of insurance policies for trucking companies. So, coverage can cost truckers over $6,500 a year, or $0.05 per mile.
As trucks drive a long distance, their tires are replaced or repaired more frequently than the average vehicle. Truck tires can be retreaded to add some miles, and most are. Retreading is much cheaper than purchasing new tires, which cost around $250 apiece. Even with retreading, though, annual tire expenses add up to over $4,000, or $0.03 per mile.
Coming in just behind tires, the price of permits and licenses for truck drivers and equipment, in addition to the price of access to toll roads, can cost trucking companies $3,600 annually, or $0.02 per mile.
The average truck driver spends over $600 a year on coffee (if you have 10 drivers, you’re looking at over $6,000 a year in coffee). To drive a massive vehicle for hours on end, you have to stay alert, so for many truck drivers, coffee is a must.
As you can see, running a trucking business, while worth it, is expensive – most of these businesses spend around $180,000 a year to operate a heavy commercial vehicle. Because of this, it can be tempting to save every penny you can, but there are some small expenses that are well worth the additional cost, one of them being trucking tax services. While it may be free to file a paper IRS Form 2290, it can be time-consuming, tedious, and easy to mess up – not to mention waiting an undetermined amount of time to receive your stamped Schedule 1 which you will need to register your vehicles. So, although it may cost you a few extra dollars, trucking tax services are almost always worth the investment.
Why is this, you might ask? When operating a trucking business, your time is best used driving miles and finding good-paying jobs, so filing IRS forms by hand isn’t a great way to spend it. Say you generate $250,000 in annual revenue for your truck as an owner operator. If you work a 40 hour week 50 weeks a year, this means the opportunity cost of NOT spending your time generating revenue would be $125 an hour. So, spending your day going through the tedious Form 2290 filing process really isn’t worth your time when instead, you can pay a small fee and receive a stamped Schedule 1 in minutes.
Your time is valuable, and i2290’s Form 2290 trucking tax services can save a great deal of it. Our software will walk you through a short series of questions about your vehicles and your business, then automatically calculate your taxes for you. After that, all you have to do is put in your payment information, and you’ll receive a stamped Schedule 1 in a matter of minutes.
Are you ready to reclaim your time and get back to what you love? Create an account with i2290 today!
Special note: This article is for informational purposes, and is not intended to provide, and should not be relied on for tax, legal, investment, or accounting advice. The best way to ensure you’re correctly calculating your expenses and paying appropriate taxes is by following IRS regulations and consulting with a tax professional.
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