Common Business Questions for Owner-Operators

Here is a list of the most commonly asked business questions we receive from owner-operators, and our answers to those questions.

Q: How do I keep track of how my business is doing?

A: The best way to track the health of your business is by keeping good records of your revenue and expenses. You can do this by saving and recording all of your receipts and using them to build a profit and loss statement. With this, you’ll be able to see how your business is performing month to month. You can drill down further into your profit and loss statements by keeping track of expenses by category. From here you’ll be able to see the areas of your business where you’re struggling and the areas you can improve.

Q: What’s my breakeven point?

A: Your business typically has to pay for its own costs and support your personal needs. Your business plan should help you determine at what revenue point (daily, weekly, monthly, or at how many miles) you have to hit to cover all these costs. This is known as the breakeven point or breakeven miles. Factor in your personal costs as part of your business plan and re-evaluate costs at least every six months or whenever there is a significant change in your business or personal life. For example, consultants at ATBS work with small business owners on this process regularly and help customize their client’s plans to become their personal “profit plan.” This is the minimum amount of money you should aim to make or miles you should plan to drive in order to at least keep your business from losing money.

Q: Should I have a trucking business plan?

A: Before you start a trucking business, the first thing you should do is write up a business plan. Understanding how your business is going to operate might change over time, but writing out the basics will provide you with a roadmap.

Q: What is Per Diem?

A: In its simplest terms, the Per Diem deduction is a tax deduction that the IRS allows to substantiate ordinary and necessary business meal and incidental expenses paid or incurred while traveling away from home. The Per Diem rate is set by the IRS. The current rate (as of October 1, 2021) is $69 per day in the Continental US. You may hear the amount of the deduction quoted as $55.20. That is because the IRS usually only allows you to deduct 80% of that rate.

Q: What is IFTA?

A: The International Fuel Tax Agreement (IFTA) is a pact between the lower 48 states and the ten Canadian provinces that require all interstate motor carriers to report fuel taxes. IFTA was put in place to replace the old fuel tax system, in which trucks were required to have a separate decal for every state they operated in. The current IFTA reporting system simplifies the hassle of reporting fuel tax for trucking companies (including owner-operators) who operate across IFTA jurisdictions by reducing paperwork and minimizing the compliance requirements. At the end of each quarter, you must submit an IFTA report that lists the miles driven and the gallons purchased. These reports will determine either the amount of tax still owed or the refund you are due. Keep in mind that IFTA is not an additional tax. IFTA was put into place to redistribute the tax to the states where the fuel is actually being used, not where it is purchased. This means no matter where you buy the fuel, you're paying the fuel tax in whatever states you're driving in.

Q: What is HVUT?

A: The Heavy Highway Vehicle Use Tax is a tax imposed yearly by the IRS on anyone who owns and operates a heavy highway vehicle (Class 6, 7, and 8 trucks are included) with a taxable gross weight of 55,000 lbs. or more on public roads. These taxes currently have a maximum of $550 per year (taxes increase as the taxable gross weight of the vehicle increases), and they are used for highway construction and maintenance. The FHUT tax season