Setting aside tax money

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estimated-Taxes

 

Good rule of thumb is to set aside 8% of the truck's gross revenue, not your net, but gross. Quarterly payments have been required for decades.

 

As an owner/operator, you are responsible for all of your self-employment taxes, not half.

 

Set aside about 20% and that should cover most of your tax liability. You only pay tax on the NET, not gross. If you are a sole proprietorship, you also only pay the self employment tax on the NET. You might want to consult with a tax professional to help with some tax planning. There are a number of ways in which to shelter income from the tax man.

 

8% of gross works out to about 20% of net. Just a quicker way to estimate, without having to do all the math to find the net.

 

That tax break is gone.

 

What we do is pay ourselves about 28% of the load. 38% goes into the business checking the other 33% goes into savings for taxes. How that will work out for us I have no clue. We do occasionally dip into personal funds for fuel or maintenance if we run a little short or have an unexpected repair but its always better to withhold more to pay your taxes than not having enough. Even withholding that 33% might be a little bit low in the large spectrum of things. I'll let you know how it turns out next year when tax time rolls around and all is said and done. It'll either be yipee or oh shoot the IRS is after me.