Be sure to avoid doing these top five things so you can continue running a healthy, profitable hotshot business.
1.) Not Keeping Good Records
Well-kept records are fundamental to a thriving business. Proper record keeping comes in handy for tax reasons, budgeting, and planning. Not knowing how your business is doing can be very stressful.
Are you making enough money? Did you get paid on time? What about taxes? Do you need to renew your insurance? Do you even have insurance? Insert instant panic attack.
Proper record keeping can relieve your stress. With a simple routine and a good record keeping system, you can keep on top of your business affairs. I would suggest making each file special. For instance, only keep insurance-related documents in one folder, and only keeping tax-related documents in another. You get the idea. This way everything has a “home,” so to speak, and you do not have miscellaneous documents everywhere. Everything can be found, and no one is harmed.
2.) Not Hiring a Good CPA
You are in the hotshot business, and you are making the jack. You don’t think about withholding taxes because you have worked for someone else your whole life. You end up spending the money instead of making your estimated monthly tax payments. Before you know it, you end up owing the IRS thousands of dollars in taxes, and the IRS does not play around. They might end up putting a lean against you, and this prevents you from getting lines of credit, and they will start garnishing your wages from your bank account.
Hiring a good CPA will ensure that you set up your business correctly, and you are paying your taxes regularly. Some may choose to do an S-Corp because of the pass-through taxation benefits, others may do an LLC. Whether you are hiring a full-time accountant, or you are using a local certified public accounting (CPA) firm, your CPA will help you figure out all of that, set you up on estimated tax payments so, help you get the right deductions so you can pay fewer taxes and put more back into your business and your wallet, which is why your in the hotshot business to begin with.
3.) Not Having a Good Attorney
Most small business owners only think about hiring an attorney when there is a serious legal problem, but it is a fantastic idea to hire a good attorney to work with your business. The legal help you will receive will probably end up saving you money in the grand scheme of things.
While you obviously will not need an attorney for every step of running your business, an attorney can help with helping format your companies Limited Liability Corporation (LLC) structure, ensuring you have the right licenses and permits, and audits. If a small problem does arise, your attorney can prevent it from becoming more.
4.) Not Having Insurance
Don’t have insurance? That is like placing your own head in the guillotine. Yes, insurance is high. That is part of being a business owner and it is why many people choose to work for someone else than for themselves. If you decided to become a business owner, more than likely, you made a decision to go into business for a potential profit and to avoid risks.
Yes, we all know the appeal of trying to slip through the cracks to save a little bit of money. Trust me, the DOT is like a bird of prey flying high above the Nevada desert. Their talons are stretched; their eyes scanning the hot desert floor looking for little bitty mice without insurance they can sweep down from the heavens and devour.
In all seriousness, in the trucking industry, accidents can occur and lives or properties might be lost. Not having your business insured can jeopardize everything you have worked for and achieved. Without having insurance for your business, your business would be unprotected to the risks you have worked very hard to avoid.
5.) Not Having the Proper Paperwork
So you just crossed the state lines from Kentucky into Tennesee, and you casually glance at your rearview mirror. You see a cop trailing close behind you, obviously running your plates. Sweat begins to bead from your brow and your blood pressure is through the roof. You made a very low bid on this haul from uShip, and you did not get the *whatever specific paperwork* because you were trying to save some money. You were hoping you could make it to northern Alabama under the radar because you are sleek like that. However, you know if you get pulled over, the Department of Transportation is going to hit you with that high fine. It will take all of the profits from this haul, and probably your next two hauls to cover it.
You keep anxiously glancing at your mirrors. Praying the cop will just speed up and pass you on your left. Despite all your prayers, he does the complete opposite. The blue lights flicker, and you know your luck has run out. You know you are screwed.
In order for your business to succeed, it is important you do not make these five mistakes. If you have any dos and don’ts for the hotshot trucking business, let us know in the comments below.