The only thing that should be considered when doing your costs are those directly related to running your business. We all have personal expenses, but unless those expenses are somehow tied to the business, they are not related to your cost of doing business. It will give you a skewed view of your actual expenses. You may write off part of your home for your business, but should not include the entire payment unless your business pays for it. It is a good idea to keep your business and personal expenses separate. For instance, unless you use your personal vehicle in the business, then you cannot legally write the expenses from the business. If you buy groceries to consume while on the road, then you can write those expenses off but if they are consumed while at home, they are not business expenses. I would not consider groceries as part of my operating expenses when doing my projections. You have to eat, whether you are on the road or not. I usually take anything that is used directly in the business and consider those as legitimate business expenses. When doing operating costs, the only expenses that should be considered are business licenses, permits, equipment payments, repairs, fuel, etc., Those are operating expenses.

 

I understand completely what the Rev is trying to tell everyone.

You have to figure every penny that it takes to run your business, and support your family.

If the gross amount you take in with the truck is less than your gross expenditures for all things (business & personal) then you're on the road to bankruptcy.

 

I understand what he is trying to say, but including household expenses in with operating costs is not an accurate way to keep track of business expenses. It also doesn't show those new to the business exactly what You should have enough over and above your operating expenses to take care of all household expenses and still have something left over to put aside for savings, etc., I know some owners who pay themselves a flat salary each week. They feel it is easier to plan and pay bills with a fixed amount coming in each week. Others pay themselves either by the mile or percentage as if they were a driver working for the company. Those who constantly take everything out of the company are sitting themselves up for a hard fall. You cannot take everything out of the company without repercussions. There should be enough coming into the company for you to do at least as well as if you worked as a company driver.

 

You are absolutely right. But I never said I was keeping track of business expenses. I don't keep track of my operating costs. My accountant does. That is what I pay him for, and why he sends me monthly profit/loss statements.

I still maintain that if you don't include your PERSONAL expenses into your cost-per-mile calculation (either as a per mile figure which you call "salary" - DUH, or as a fixed salary).

GMAN, once again you claim that I am wrong about something, and then you preach the exact same thing that I am saying:

So, please explain how those who feel that they shouldn't include ANY pay in their cost per mile calculation know whether they are running a profitable business or not. :roll:

 

You should be able to pay yourself enough to pay your personal expenses including those at home, such as electric, gas, mortgage, etc., I don't include my personal expenses in my operating expenses for the business unless I plan on including that on my taxes. You need to keep business and personal expenses separate. If you pay yourself a salary of say $500 per week, you should be able to pay personal expenses out of that money, but other than the compensation you pay yourself as the driver, you should not include any personal expenses in your cost of operations calculations. So you include your salary or wages as an expense. Mixing personal and business expenses shows an inaccurate picture of the business expenses.

If you are incorporated, you may also pay dividends to shareholders, but those are also not part of operating expenses. They may be included in reporting taxes. You need to be careful about mixing the two expense accounts together. You may be able to pay some or part of your personal expenses such as use of your home, out of your operating account, that doesn't need to necessarily be included in the operating expense projections. That has more to do with saving tax dollars than actual operating expenses. Those expenses need to be paid by either the company or personal accounts. The only way to get a completely accurate figure for expenses is from historical data. In other words, you need to have been in business for at least a year to accurately forecast current year operating costs. The new people need some basis for estimating operating costs before going out and buying a truck. Those figures they need to get from those of us who currently own trucks.

 

You are talking out of both sides of your mouth, GMAN. On one hand, you say that you shouldn't include personal expenses with business expenses. On the other hand, you then say that you should include a salary to cover your personal expenses.

So which is it? :roll:

Besides - my accountant does a good job of keeping track of my business expenses for me. That is what I pay him to do.

 

I pay my accountant, someone who is a professional, and knows all the in's and out's of trucker's taxes, to do it for me. I send him my receipts, and he sends me a profit/loss statement each month.
Please tell me where I said I didn't know how much I spend. I can tell you how much each of my monthly bills are, without even looking it up. :roll:

 

No, what I said was that I don't keep track of all my expenses by the mile, as none of my bills are paid by the mile. I keep track of my fixed expenses by the day, and my variable expenses by the mile. My accountant provides me with a profit/loss statement each month, as I send all my information to him.

The reason I don't keep track of my expenses by the mile, is that there is NO GUARANTEE that the figure will be accurate. Let's say you average all your expenses by the mile, and you use 10,000 miles a month to calculate it. What happens if you don't run those 10,000 miles in a month? Then all those per-mile costs that you have come up with are now too low, and won't cover your expenses.

Figuring your fixed costs on something that is CONSTANT, such as the calendar, is a much better move, as they won't suddenly start removing days from each month. Fixed costs occur even if the truck isn't moving, so they shouldn't be calculated off of something that is variable, like your mileage.

Do you compute and file your own taxes as well? My accountant does that for me - the same accountant who has been running the numbers on my business all year long, and because he has been doing so, knows my numbers better than someone who has them thrown on them at tax time.