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Top 5 small trucking tax concerns

Top 5 small trucking tax concerns

Like many industries, trucking comes with its own set of business and tax concerns that can be difficult to manage, as well as challenging to understand. So it’s no wonder that owner-operated businesses can become hamstrung when dealing with the complicated maze of tax dos and don’ts—especially when they face a problem with the IRS.

“Trucking can be a challenging business to manage from an operational standpoint, with a lot of rules and procedures to adhere to, all while continuing to stay on the road,” said David Miles, a vice president at 20/20 Tax Resolution, which works with business owners to resolve issues that arise with taxing authorities. “The nature of the business can make it difficult to stay on top of all required tax regulations and obligations.”

All told, nearly 15 percent of 20/20 clients come from the trucking industry—and most clients are owner-operators who both own the company and do the hauling. Based on this experience, Miles had some key areas that trucking businesses should monitor in order to avoid tax trouble:

  • Employee classification (Full-time vs. 1099): It’s important to pay close attention to the way in which employees are classified—and proper classification becomes even more challenging in a business that typically employs multiple types of employees. Incorrectly classifying employees as contractors or vice versa can raise questions. In order to avoid this issue, use extreme care to ensure that all workers are properly classified as either employees or 1099. Of course, no business wants to overpay, but you also don’t want the IRS to re-classify your employees for them.
  • Exhaustive and burdensome paperwork: While they’re constantly on the road with ongoing short- and long-haul loads, many in the business barely have time to sleep let alone run a business. Often, simple failures such as staying on top of record keeping results in tax woes. Unfortunately, the trucking business involves a great deal of backend paperwork, forms, applications and other documentation that can easily become lost or forgotten. Failure to properly maintain all of this critical paperwork when and where it is required can create a backlog that becomes nearly unmanageable—and ultimately a real hazard to tax management. Don’t try to do it all yourself. Obtain solid administrative help using reputable software or turn to a tax professional to ease this burden and avoid problems.
  • Job and payment management: More often than not, those in trucking rely on the payment schedules of others, never knowing exactly when they’ll be paid. In an industry where both contractors and employers are constantly juggling expenses and payments, the restriction of cash flow can become a very real tax concern. This makes monetary organization even more critical—and is frequently a cause of unwanted tax issues.
  • Ineffective planning: The peaks and valleys of the industry can lead to boom times with an influx of cash and down times when businesses are strapped to pay the bills. During the “good times” it may become attractive to pay off large loans or expenses when that may not always be the best course of action. Or, businesses may decide to use available cash to make large infrastructure purchases when obtaining a loan for these costs might be a smarter approach. The lack of effective planning and relying upon external forces to control the company pocketbook can make a business vulnerable to tax problems in the future.
  • Education: If you, like many in the trucking industry, are not as up to speed on basic business tax matters as you should be, there are a wide variety of resources to help entrepreneurs understand the basics that can help them avoid tax problems. For a list of resources visit

“Federal and state tax liens can cast doubt on an individual or company’s reliability – a critical aspect in judging one’s ability to move product around the country,” Miles said. “This can become especially true when things start to show up on credit or legal searches. Ensuring that these issues are monitored and managed correctly is a critical component of running your business successfully.” 

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