A bookkeeper workingIt is important for any owner-operator to have a firm understanding of proper bookkeeping, as this aspect of the business helps you to avoid audits triggered by messy books. Fortunately, many companies are beginning to realize the benefits of outsourcing trucking accounting services so they can ensure that all their financial documents are organized while focusing on making money through driving.

Here are three of the best ways to make sure you do your bookkeeping right and avoid audits and any possible penalties:

Understand financial functions

To do bookkeeping properly, you need to have a good understanding of your financial functions, cash flow, and taxes. If it all seems too much to take in, you can consult an analyst or outsource your accounting department.

Aside from the obvious benefit of getting rid of the hassle of dealing with payroll and billing, outsourcing accounting services can help free up your schedule so you can spend your time managing the operations aspect of your organization.

Bookkeeping is also effective for monitoring financial activity such as income, recurring expenses, and annual expenditure. This allows owner-operators to monitor the flow of financial activity and easily recognize financial trends so they can make better business decisions.

Understand inspection categories

Department of Transportation audits can be scary if you do not know the specific documents you need to present during the evaluation. To prepare for DOT audits, it is important to submit documentation of insurance for the type of cargo that the drivers are transporting. All drivers carrying commercial vehicles must also submit proof of having correct licensing, as well as records of alcohol and drug screening.

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Audit-proof your tax returns

An audit can cost you more money when the IRS finds questionable information in your taxes, so make sure to provide a reasonable explanation for any boost in income and submit documentation like 1099s, W-2s, along with other paperwork that can help explain the increase in income.

Accounting is an essential aspect of any trucking business, which is why it is crucial to keep good financial records and stay on top of your bookkeeping.