Why should you track your business expenses?
Tracking your business expenses can provide many additional benefits outside of just knowing how much your business is spending. Let’s look at a few more reasons why tracking your business expenses is crucial to your success:
Wouldn’t it be great to reduce your tax liability, the amount you pay in taxes? Well, if you’ve tracked your expenses all year, you can likely do this! Accurately recording your trucking business expenses can allow you to potentially claim deductions and lower your tax liability. Plus, your accountant will love you!
You can’t really know the health of your business operation until you consistently track your expense data. Recording your business expenses will help you understand if you are spending within your means, charging your customers appropriately, and where your money is going.
Cost Per Mile
You’ve probably heard of us mention the holy grail metric of owning a trucking business – your cost per mile. This metric not only helps you understand your expenses, but it also helps you determine your pricing and when loads are worth taking. You can only calculate cost per mile if you have accurately tracked your business expenses – so, track them!!
Ever forget about a long-lost subscription that you eventually discover has been charging you for months, if not years? It happens to a lot of us. Monitoring your business expenses will help you notice and reduce unnecessary costs.
While creating a budget doesn’t seem like a fun thing to do, it is crucial to your business success. You’ll need to be tracking your business expenses to create an effective budget. Lucky for you, our Soshaul nerds have already created a FREE Personal & Business Budget Template. Click here to go to our FREE resources page and download it there. You’re welcome!
Once you have created that nifty budget, you can then monitor your expenses to catch where you are overspending or where you can save some cash.
Thinking about buying a new trailer or truck in a few years? Well, if you track your expenses accurately, you will have a better idea of what you can afford, what level of financing you may need, and you can begin creating a financial plan. Thoroughly understanding your business expenses can help you strengthen your credit score and prepare for investment or growth opportunities.
While it may seem obvious, you can’t calculate your business profit if you don’t know your business expenses (or business revenue). Revenue – Expenses = Profit. So, if you want to know how much money your business is making…track your expenses!
Like that long-lost subscription, some expenses slip through the cracks. If you are consistently tracking and monitoring your business expenses, it will be extremely hard for a vendor to overcharge you or for someone to drain your bank accounts or credit card.
The list can really go on, but you are probably ready to learn HOW you can track business expenses. So…
How can you track your business expenses?
One of the most common ways to track your business expenses is by creating or purchasing a spreadsheet template. We’ve created a pretty solid template that is MUCH more than expense tracking. The Definitive "All-in-One" Trucking Business Spreadsheet is...well, an all-in-one spreadsheet for your small trucking business! The workbook includes a detailed business dashboard that features key metrics to monitor your business's health such as your average cost per mile, expense and revenue totals, and more. With formulas already built-in, tracking expenses, revenue, trip details, and miles is easy! You will also receive a BONUS Tax Deduction summary report based on your specific operation. The spreadsheet also features 17 expense categories that will allow you to easily organize and track your business expenses.
Applications or Transportation Management Systems (TMS)
There are lots of apps out there that will allow you to track business revenue and expenses. Some popular apps include:
You could also use a Transportation Management System (TMS) to capture business data, but they can be pricey (depending on your needs), especially for small business owners.
It’s important to consider that if you choose to use an app, all your business data is at the mercy of that software company. If they shut their doors, your data may disappear as well. We advise that even if you use an app or TMS, you should frequently download the data or track your own data in a separate spreadsheet that can be saved locally to your computer, hard drive, flash drive, etc.
Pen and Paper
If you aren’t comfortable using your phone or computer to track expenses, you can always do it the old-fashioned way by utilizing pen and paper. While it isn’t ideal for monitoring business health or creating quick calculations, it is better than not tracking at all. Do what works best for you!
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Soshaul Logistics LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. It is meant to serve as a guide and information only and Soshaul Logistics, LLC does not assume responsibility for any omissions, errors, or ambiguity contained herein. Contents may not be relied upon as a substitute for the FMCSA's published regulations. You should consult your own tax, legal and accounting advisors before engaging in any transaction or operation.