To our dear truckers, how is your driving today?
We hope that as you are reading this article, you have returned from your trips safely and are having a good rest instead of struggling over all the transaction receipts that keep piling up every day.
This article is for truck drivers who start their own business, trucking companies, and anyone who is interested to know more about bookkeeping, its role in business, and suggestions on how to keep the books the right way.
What Is Bookkeeping?
To simply put, bookkeeping is the activity of keeping records of and organizing the financial affairs of a business. It mainly involves the recording of all the financial transactions that occur in the course of the business on a daily basis, ranging from sales earned revenue, earned interest, to payroll, payment of taxes, and operational expenses. Sounds like a lot of work, doesn’t it? The real responsibilities of a bookkeeper can be even more overwhelming, but they are considered an indispensable part of any business. Because every penny earned and spent is tracked by bookkeeping, it provides important source data for the process of accounting, which focuses on summarizing, classifying, analyzing, and interpreting this financial data. It is not an overstatement, therefore, to say that accounting starts with, first and foremost, proper bookkeeping that maintains accurate and up-to-date records.
Why Is Bookkeeping Important For Business?
For companies and organizations, many of their major functions depend on the information recorded in accounting books. Which products have been selling well? How profitable is the business at a point in time? What purchases have been made? Anything that may affect the income and expenditure of the business can be identified easily with good bookkeeping. Not only does it offer a realistic ‘snapshot’ of the business performance at a specific time, but bookkeeping also plays a fundamental role in helping business owners make strategic decisions on, for example, allocating its budget, making new investments, adjusting the workflow, or reassessing the financial plan.
External users, including investors, financial institutions, and the government also rely on the information accessed through bookkeeping to have a comprehensive understanding of the business’s current situation and future prospects. Actions speak louder than words, but in the case of doing business, numbers speak loudest than all. Piles of receipts and their seemingly emotionless numbers, then, are not to be overlooked at all costs. Small and big businesses alike need to bear this in mind and ensure that their bookkeepers, accountants, or any other people and organizations that they entrust to carry out bookkeeping activities, are doing a decent job.
What Is A Transaction Receipt?
A transaction is a completed agreement between a buyer and a seller to exchange goods, services, or financial assets in return for money. In business bookkeeping, a transaction may be recorded by a company earlier or later depending on the accounting system it uses. Accrual accounting recognizes a transaction immediately after it is finalized while cash accounting, used mostly by smaller businesses, instead records a transaction only when money is received or paid out.
Why Is It Important To Keep Track Of Transaction Receipts?
Since there are various transactions going on daily within a business that may get out of hand without adequate management, keeping track of transaction receipts as a kind of proof that something of value has been transferred from one party to another, is a must, whichever accounting system is being used. In other words, a receipt can be seen as proof of ownership that results from a transaction. A transaction receipt should show basic information of the sale or purchase such as the payer and payee, the value of the transaction, date when the transaction is completed, method of payment, and evidence of fund transfers.
Strictly speaking, all types of receipts are necessary for the business to some extent, and we had better not take the risk of missing any of them, even when they are only cash slips for small cash payments. The Internal Revenue Service recommends retaining several types of receipts that document certain expenses for tax purposes, like cash register tapes, receipt books, invoices, credit card receipts, and statements, etc. Moreover, receipts are also required in basically any return/refund policy, making them an essential product warranty from the perspective of both sellers and customers.
Taking the importance of transaction receipts into account, keeping them safe and sound is of high priority for the accounting department of any business. While conventional paper receipts are still in practice, they are now mostly used alongside digital receipts that are easier to be stored, preserved, retrieved, and reproduced. Bookkeepers, thus, need to be aware of this trend and make sure that every receipt is kept in place, in their books, and on the cloud, readily accessible and retrievable on demand.
Bookkeeping Practices For Truckers
For truckers who spend most of their days on the road, bookkeeping may not be the first thing on their priority list. However, as in other kinds of businesses, trucking companies and owner-operators must pay their utmost attention to getting the business up and running by fulfilling the back-office tasks. Keeping their books organized is just as important as completing the shipping missions because knowing that all receipts, expenses, and purchases have been carefully recorded, truckers can focus on driving with peace of mind.
To those who are new to the trucking industry, the off-the-road workload of a trucking business may be unexpectedly heavy. Some major duties of a trucking bookkeeper include, but are not limited to, tax management, billing and tracking customers’ payments, maintenance management, and creating trip records.
- Keep track of dispatches. We don’t need to emphasize more the significance of having customers pay on time for the carrier’s services! It goes without saying that the business income, as well as profits, depends largely on this, so making sure that all dispatches are billed and paid is the most basic job a bookkeeper must do.
- Keep track of each trip’s expenses. The world of trucking is on the road, and every trip counts when it comes to managing business costs. Besides your driving license, don’t ever forget to collect all the fuel receipts and keep them in a safe place.
- Keep track of taxes such as the IFTA and IRP. One of the first lessons in dealing with trucking finances is taxes. Taxes specific in trucking business include International Fuel Tax Agreement (IFTA) and International Registration Plan (IRP) related fees. Calculating these taxes can be really confusing or even stressful because of the varying rules and regulations applied to each state which fluctuate from year to year. What’s more, failures to submit IFTA and IRP reports and making tax payments also lead to severe fines or penalties that no trucker wants to experience. Here’s where bookkeeping comes to the rescue with all fuel purchase receipts stored and classified neatly, which makes tax management much less time and energy-consuming.
- Pay the drivers. This entails tracking their driving records, but more than simply paying for their labor other aspects such as insurance and medical care should be included to ensure their health and safety are cared for as well.
- Pay the maintenance bills. As a truck driver, your truck is your biggest asset. A truck in a good condition keeps your ride safe and is crucial to the life of your trucking business. Just like regular health check-ups make people aware of their well-being and identify health risks at an early stage, regular maintenance can help the driver avoid unnecessary repair costs or purchases if some parts are broken and require replacements due to late repairs.