New Owner Operator; What to ask CPA?

Hello, all

I have an appointment with our new CPA tomorrow morning, and I was hoping some of you might have some insight into what sort of questions/information I should be bringing with me!

It's in my nature to come prepared and well-researched, but I know there are many things that can only be learned from experience (especially in business, and ESPECIALLY in this business!).

What are some basic but essential questions? What do you wish you had known, done, or asked when you first started your business, and when you first dealt with a tax pro?

For context, the business will be My fiancé, Jimmy, and I. We have one truck, and at least 3 friends/contacts whose businesses will be using us once we're all set up. Jimmy will drive, and I will basically do the rest! And occasionally his Uncle was hoping to do a couple hauls for us (he used to drive OTR, and was pretty stoked when he found out what we were doing, said he'd split the pay with us and really just wants to do it a few times for love of the game lol). We're in California and will be crossing state lines, but won't be going full-blown OTR.

 

Two things;

first is do not depend on friends for work.

Second is don’t hire family to work for you.

oh and even if you have an occasional driver, do the same process like you would hire them as strangers, have a drivers file, application and all of the other stuff well documented, because if he gets into an accident your **** is in the line and you want to cover it as best as possible which brings me to an addition to number two point, never hire family. If he gets into an accident and it is his fault, then protect yourself, not him no matter what.


EDIT - just to add, LLCs do not protect assets in this industry. They make it great for taxes.

 

I have wondered, is this true even if the "owner" of the LLC doesn't drive himself? Or is particularly dangerous to believe it protects personal assets when the owner is the one and only driver alone?

 

Your legal structure is going to determine what you will talk about.

Make SURE you have an operating agreement that addresses what happens when one of you dies, divorce, drug use, etc, etc. Since you aren't married, you need to protect your interests through the operating agreement and formal ownership agreement. If Lothario goes off the rails, you need to be protected.

Questons for the CPA:

Meals and Incidental expense allowance?
wage vs draws
depreciation schedules for each asset
quarterly income tax filings, self employment taxes, employment tax filings
Workmans comp requirements
retirement accounts (SEP? SIMPLE? Solo 401K?)
Health insurance options
Setting up the chart of accounts for your Quickbooks
Managing customer credit
Record keeping system for expenses

I'm sure others will add more.

 

Why do you feel you need a CPA? I pay my old school tax guy about $300 to take excellent care of me every year including advice whenever I need it.

IMO a CPA is overkill for one truck. I'm not an LLC either and see no reason to be.

 

I was an o/o for a while, (until I wised up,) anyway the lady at my insurance place told me the LLC wouldn’t help me because a smart lawyer will just sue your company and then you as the driver. The only reason she said to get an LLC was so if you hired someone and they got in a wreck. Then the lawyer isn’t supposed to be able to take your personal belongings although a good one might even figure that out lol. Needless to say I never bothered to get one.

 

Hey, sounds like you are doing the right thing by getting prepared.

Ask your CPA what type of business setup is best for you in California, especially since you will be crossing state lines sometimes. It matters for taxes, liability, and keeping everything running smoothly.

Make sure you understand exactly what records you need to keep. Things like mileage, fuel, truck maintenance, invoices, and insurance all matter. Keeping good records from day one will save a lot of headaches later. You can also ask which expenses you can write off so you are not paying more taxes than necessary.

Talk about paying anyone who might drive for you occasionally, like your Uncle. Make sure you understand the difference between 1099 and W-2 and how to do it properly. It can be confusing at first, but it is important to get it set up correctly.

Ask about tracking your money so you always know what is coming in and going out. This will help you plan for taxes, repairs, and other costs. It is also smart to ask what mistakes new owner-operators make most often. Hearing those tips from someone experienced can save time and money.

Being honest about what you do not know and asking questions is one of the best moves. You are already ahead of many people just by thinking about this ahead of time. Take notes, ask plenty of questions, and you will come away feeling much more confident.

 

There are significant potential tax benefits to operating an LLC. Reduction in Self Employment taxes and access to MI&E ("Per Diem") are two important ones that will more than pay for the cost of the LLC.

In this case, where she is not married to the driver, the LLC CAN offer protection from liability for her, if the LLC is executed properly, and she is not negligent in her actions around the incident that brings the litigation.

 

Ask if he is familiar with, and has other trucking clients. If not - move on.

 

Nothing can protect you from a lawsuit if you are the one who caused the issue.If you drive for the biggest corporation in the world if you caused the wreck that where there’s a fatality you can and probably will be named in a lawsuit and the company .Now realistically a attorney is really only interested in the insurance company since that’s where the money is in most cases.