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Flatbed Rates Rise as Vans and Reefers Dip

Jul 23 – 29 – An unexpected boost in freight volumes lifted load-to-truck ratios for all equipment types in late July. Rates did not follow suit, although they remain atypically strong for the season. National average van rates dipped 2¢ and reefers lost 1¢. Only flatbed rates rose, adding 1¢ per mile to the national average.

The chart above depicts national average spot market rates for the past four weeks, including fuel surcharges. Weekly rate snapshots reflect averages for the month to-date, from DAT RateView.

Industry Trends - Spot Market Industry Trends - Van Industry Trends - Flatbed Industry Trends - Reefer Industry Trends - Fuel Prices
Industry Trends WEEK MONTH YEAR
Jul 23 – 29 vs.
Jul 16 – 22
Jul 2017 vs.
Jun 2017
Jul 2017 vs.
Jul 2016
Spot Market Loads +2.2% 16% +89%
Spot Market Capacity 2.3% 5.4% +0.3%
Van Load-To-Truck +8.5% 7.1% +81%
Van Rates (Spot) 1.1% 0.6% +9.8%
Flatbed Load-To-Truck +3.1% 14% +156%
Flatbed Rates (Spot) +0.5% +1.4% +14%
Reefer Load-To-Truck +6.2% 13% +68%
Reefer Rates (Spot) 0.5% 1.9% +7.8%
Fuel Prices +0.8% 0.6% +3.8%
Freight Volumes Get Unexpected Boost

Last update: 8/2/2017 – Next update: 8/9/2017

Fuel Prices
+0.8%$2.53 / g
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DAT News & Blogs

1. ELD Mandate

Of course, Electronic Logging Devices are what’s on most people’s minds. Come Dec. 18, every carrier will be required to have ELDs in their trucks, which the driver will use for their hours-of-service (HOS) logs. Some drivers think it’s an overreach by Big Brother, while other owner-operators see it as an added expense and obstacle that could put them out of business. Most hope that the Trump administration will do away with it.

So far, we haven’t seen anything to suggest that it’s going anywhere. President Trump’s executive order to freeze new regulations applied to proposed rules like speed limiters, but the ELD mandate is already law. Most of the big carriers have been using ELDs for years – organizations like the ATA support the ELD mandate – so it’s small carriers and owner-operators who will be most affected by the law.

Back in Novemeber, Todd Spencer, executive vice president of OOIDA, pointed out to Overdrive Magazine that the political climate hasn’t changed so much since the ELD mandate was first introduced.

“We’ve had Republican control of both the Senate and the House for quite a while,” he explained.  “Unfortunately, the ELD rule was pushed through by Republicans in Congress, even some Tea Party Republicans.”

That said, OOIDA recently filed a lawsuit with the Supreme Court to try to stop the rule.

2. Carrier Safety Fitness Determination

The FMCSA announced that they’re postponing the new rules that would measure a carrier’s Safety Fitness Determination. Most carrier associations opposed the SFD because the guidelines were based on safety data they considered to be flawed.

3. New Food Safety Rules

New standards for transporting food went into effect in April. For now, the new rules only apply to large companies, and everyone else has until April 2018 to comply. You can click here to see if your company is exempt.

4. HOS: 34-Hour Restart

The 2013 version of the 34-hour restart rule required that drivers be off duty for two periods from 1:00 to 5:00 AM in order to reset their hours of service. You could also only use the restart once per week. A recent study of the rules determined that they weren’t any safer, so those are now gone for good.

5. Final Stage of MC Numbers Rule Suspended

The Unified Registration System will eliminate docket numbers (MC numbers) for carriers and brokers (FF numbers, etc), identifying them solely by their DOT number. While NEW carriers and brokers are now required to use the URS, the final phase will apply to EXISTING carriers and brokers. That final stage is on hold for now.

DAT News & Blogs

Apply for a Loan

Before you apply for a loan here’s what you should do:

1. Write a Business Plan

Your loan request should be based on and accompanied by a complete business plan. This document is the single most important planning activity that you can perform. A business plan is more than a device for getting financing; it is the vehicle that makes you examine, evaluate, and plan for all aspects of your business. A business plan’s existence proves to your banker that you are doing all the right activities. Once you’ve put the plan together, write a two-page executive summary. You’ll need it if you are asked to send “a quick write-up.”

2. Have an accountant prepare historical financial statements.

You can’t talk about the future without accounting for your past. Internally generated statements are OK, but your bank wants the comfort of knowing an independent expert has verified the information. In addition, you must understand your statement and be able to explain how your operation works and how your finances stand up to industry norms and standards.

3. Line up references.

Your banker may want to talk to your suppliers, customers, potential partners or your team of professionals, among others. When a loan officer asks for permission to contact references, promptly answer with names and numbers; don’t leave him or her waiting for a week.

Walking into a bank and talking to a loan officer will always be something of a stressful situation. Preparation for and thorough understanding of this evaluation process is essential to minimize the stressful variables and optimize your potential to qualify for the funding you seek.

DAT News & Blogs

Tax Tips 2017

Tax Changes for 2017: A Checklist

 Welcome, 2017! As the New Year rolls around, it’s always a sure bet that there will be changes to current tax law and 2017 is no different. From health savings accounts to tax rate schedules and standard deductions, here’s a checklist of tax changes to help you plan the year ahead.

Individuals

For 2017, more than 50 tax provisions are affected by inflation adjustments, including personal exemptions, AMT exemption amounts, and foreign earned income exclusion.

While the tax rate structure, which ranges from 10 to 39.6 percent, remains the same as in 2016, tax-bracket thresholds increase for each filing status. Standard deductions and the personal exemption have also been adjusted upward to reflect inflation. For details see the article, “Tax Brackets, Deductions, and Exemptions for 2017,” below.

Alternative Minimum Tax (AMT)
Exemption amounts for the AMT, which was made permanent by the American Taxpayer Relief Act (ATRA) are indexed for inflation and allow the use of nonrefundable personal credits against the AMT. For 2017, the exemption amounts are $54,300 for individuals ($53,900 in 2016) and $84,500 for married couples filing jointly ($83,800 in 2016).

“Kiddie Tax”
For taxable years beginning in 2017, the amount that can be used to reduce the net unearned income reported on the child’s return that is subject to the “kiddie tax,” is $1,050 (same as 2016). The same $1,050 amount is used to determine whether a parent may elect to include a child’s gross income in the parent’s gross income and to calculate the “kiddie tax.” For example, one of the requirements for the parental election is that a child’s gross income for 2017 must be more than $1,050 but less than $10,500.

For 2017, the net unearned income for a child under the age of 19 (or a full-time student under the age of 24) that is not subject to “kiddie tax” is $2,100.

Health Savings Accounts (HSAs)
Contributions to a Health Savings Account (HSA) are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Medical expenses must not be reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return.

A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care.

For calendar year 2017, a qualifying HDHP must have a deductible of at least $1,300 for self-only coverage or $2,600 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,550 for self-only coverage and $13,100 for family coverage.

Medical Savings Accounts (MSAs)
There are two types of Medical Savings Accounts (MSAs): the Archer MSA created to help self-employed individuals and employees of certain small employers, and the Medicare Advantage MSA, which is also an Archer MSA, and is designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare. Both MSAs require that you are enrolled in a high-deductible health plan (HDHP).

Self-only coverage. For taxable years beginning in 2017, the term “high deductible health plan” means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,250 and not more than $3,350 (same as 2016), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,500 (up $50 from 2016).Family coverage. For taxable years beginning in 2017, the term “high deductible health plan” means, for family coverage, a health plan that has an annual deductible that is not less than $4,500 and not more than $6,750 (up $50 from 2016), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,250 (up $100 from 2016).

Penalty for not Maintaining Minimum Essential Health Coverage
For calendar year 2017, the dollar amount used to determine the penalty for not maintaining minimum essential health coverage is $695.

AGI Limit for Deductible Medical Expenses
In 2017, the deduction threshold for deductible medical expenses remains at 10 percent (same as 2016) of adjusted gross income (AGI). Prior to January 1, 2017, if either you or your spouse were age 65 or older as of December 31, 2016, the 7.5 percent threshold that was in place in earlier tax years continued to apply. That provision expired at the end of 2016, however, and starting in 2017, the 10 percent of AGI threshold applies to everyone.

Eligible Long-Term Care Premiums
Premiums for long-term care are treated the same as health care premiums and are deductible on your taxes subject to certain limitations. For individuals age 40 or younger at the end of 2017, the limitation is $410. Persons more than 40 but not more than 50 can deduct $770. Those more than 50 but not more than 60 can deduct $1,530 while individuals more than 60 but not more than 70 can deduct $4,090. The maximum deduction is $5,110 and applies to anyone more than 70 years of age.

Medicare Taxes
The additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married filing jointly), which went into effect in 2013, remains in effect for 2017, as does the Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (AGI) more than $200,000 ($250,000 joint filers). Investment income includes dividends, interest, rents, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts, and self-employed individuals are all liable for the new tax.

Foreign Earned Income Exclusion
For 2017, the foreign earned income exclusion amount is $102,100, up from $101,300 in 2016.

Long-Term Capital Gains and Dividends
In 2017 tax rates on capital gains and dividends remain the same as 2016 rates; however threshold amounts are indexed for inflation. As such, for taxpayers in the lower tax brackets (10 and 15 percent), the rate remains 0 percent. For taxpayers in the four middle tax brackets, 25, 28, 33, and 35 percent, the rate is 15 percent. For an individual taxpayer in the highest tax bracket, 39.6 percent, whose income is at or above $418,400 ($470,700 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent.

Pease and PEP (Personal Exemption Phaseout)
Both Pease (limitations on itemized deductions) and PEP (personal exemption phase-out) have been permanently extended (and indexed to inflation) for taxable years beginning after December 31, 2012, and in 2017, affect taxpayers with income at or above $261,500 for single filers and $313,800 for married filing jointly.

Estate and Gift Taxes
For an estate of any decedent during calendar year 2017, the basic exclusion amount is $5,490,000, indexed for inflation (up from $5,450,000 in 2016). The maximum tax rate remains at 40 percent. The annual exclusion for gifts remains at $14,000.

Ensuring Financial Success for Your Business

 Can you point your company in the direction of financial success, step on the gas, and then sit back and wait to arrive at your destination?

Not quite. You can’t let your business run on autopilot and expect good results. Any business owner knows you need to make numerous adjustments along the way – decisions about pricing, hiring, investments, and so on.

So, how do you handle the array of questions facing you?

One way is through cost accounting.

Cost Accounting Helps You Make Informed Decisions

Cost accounting reports and determines the various costs associated with running your business. With cost accounting, you track the cost of all your business functions – raw materials, labor, inventory, and overhead, among others.

Note: Cost accounting differs from financial accounting because it’s only used internally, for decision making. Because financial accounting is employed to produce financial statements for external stakeholders, such as stockholders and the media, it must comply with generally accepted accounting principles (GAAP). Cost accounting does not.

Cost accounting allows you to understand the following:

  1. Cost behavior. For example, will the costs increase or stay the same if production of your product goes up?
  2. Appropriate prices for your goods or services. Once you understand cost behavior, you can tweak your pricing based on the current market.
  3. Budgeting. You can’t create an effective budget if you don’t know the real costs of the line items.

Is It Hard?

To monitor your company’s costs with this method, you need to pay attention to the two types of costs in any business: fixed and variable.

Fixed costs don’t fluctuate with changes in production or sales. They include:

  • rent
  • insurance
  • dues and subscriptions
  • equipment leases
  • payments on loans
  • management salaries
  • advertising

Variable costs DO change with variations in production and sales. Variable costs include:

  • raw materials
  • hourly wages and commissions
  • utilities
  • inventory
  • office supplies
  • packaging, mailing, and shipping costs

Tip: Cost accounting is easier for smaller, less complicated businesses. The more complex your business model, the harder it becomes to assign proper values to all the facets of your company’s functioning.

If you’d like to understand the ins and outs of your business better and create sound guidance for internal decision making, consider setting up a cost accounting system.

Need Help?

Please call if you need assistance setting up cost accounting and inventory systems, preparing budgets, cash flow management or any other matter related to ensuring the financial success of your business.

 

DAT News & Blogs

2016 Recap: Tax Provisions for Businesses

Whether you file as a corporation or sole proprietor here’s what business owners need to know about tax changes for 2016.

Standard Mileage Rates
The standard mileage rates in 2016 are as follows: 54 cents per business mile driven, 19 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.

Health Care Tax Credit for Small Businesses
Small business employers who pay at least half the premiums for single health insurance coverage for their employees may be eligible for the Small Business Health Care Tax Credit as long as they employ fewer than the equivalent of 25 full-time workers and average annual wages do not exceed $52,000 (adjusted annually for inflation) in 2016.

In 2016 (as in 2015 and 2014), the tax credit is worth up to 50 percent of your contribution toward employees’ premium costs (up to 35 percent for tax-exempt employers). For tax years 2010 through 2013, the maximum credit was 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities.

Section 179 Expensing and Depreciation

The Section 179 expense deduction was made permanent at $500,000 by the Protecting Americans from Tax Hikes Act of 2015 (PATH). For equipment purchases, the maximum deduction is $500,000 of the first $2.01 million of qualifying equipment placed in service during the current tax year. The deduction is phased out dollar for dollar on amounts exceeding the $2 million threshold amount (indexed for inflation) and eliminated above amounts exceeding $2.5 million. In addition, Section 179 is now indexed to inflation in increments of $10,000 for future tax years.

The 50 percent bonus depreciation has been extended through 2019. Businesses are able to depreciate 50 percent of the cost of equipment acquired and placed in service during 2015, 2016 and 2017. However, the bonus depreciation is reduced to 40 percent in 2018 and 30 percent in 2019. The standard business depreciation amount is 24 cents per mile.

Please call if you have any questions about Section 179 expensing and the bonus depreciation.

Work Opportunity Tax Credit (WOTC)

Extended through 2019, the Work Opportunity Tax Credit has been modified and enhanced for employers who hire long-term unemployed individuals (unemployed for 27 weeks or more) and is generally equal to 40 percent of the first $6,000 of wages paid to a new hire. Please call if you have any questions about the Work Opportunity Tax Credit.

SIMPLE IRA Plan Contributions
Contribution limits for SIMPLE IRA plans increased to $12,500 for persons under age 50 and $15,500 for persons age 50 or older in 2016. The maximum compensation used to determine contributions increases to $265,000.

Please contact the office if you need help understanding which deductions and tax credits you are entitled to.

DAT News & Blogs

Year-End Tax Planning for Businesses

There are a number of end of year tax planning strategies that businesses can use to reduce their tax burden for 2016. Here are a few of them:

Deferring Income

Businesses using the cash method of accounting can defer income into 2017 by delaying end-of-year invoices so payment is not received until 2017. Businesses using the accrual method can defer income by postponing delivery of goods or services until January 2017.

Purchase New Business Equipment

Section 179 Expensing. Business should take advantage of Section 179 expensing this year for a couple of reasons. First, is that in 2016 businesses can elect to expense (deduct immediately) the entire cost of most new equipment up to a maximum of $500,000 for the first $2,010,000 million of property placed in service by December 31, 2016. Keep in mind that the Section 179 deduction cannot exceed net taxable business income. The deduction is phased out dollar for dollar on amounts exceeding the $2.01 million threshold and eliminated above amounts exceeding $2.5 million.

Bonus Depreciation. Businesses are able to depreciate 50 percent of the cost of equipment acquired and placed in service during 2015, 2016 and 2017. However, the bonus depreciation is reduced to 40 percent in 2018 and 30 percent in 2019.

Qualified property is defined as property that you placed in service during the tax year and used predominantly (more than 50 percent) in your trade or business. Property that is placed in service and then disposed of in that same tax year does not qualify, nor does property converted to personal use in the same tax year it is acquired.

Note: Many states have not matched these amounts and, therefore, state tax may not allow for the maximum federal deduction. In this case, two sets of depreciation records will be needed to track the federal and state tax impact.

Please contact the office if you have any questions regarding qualified property.

Timing. If you plan to purchase business equipment this year, consider the timing. You might be able to increase your tax benefit if you buy equipment at the right time. Here’s a simplified explanation:

Conventions. The tax rules for depreciation include “conventions” or rules for figuring out how many months of depreciation you can claim. There are three types of conventions. To select the correct convention, you must know the type of property and when you placed the property in service.

    1. The half-year convention: This convention applies to all property except residential rental property, nonresidential real property, and railroad gradings and tunnel bores (see mid-month convention below) unless the mid-quarter convention applies. All property that you begin using during the year is treated as “placed in service” (or “disposed of”) at the midpoint of the year. This means that no matter when you begin using (or dispose of) the property, you treat it as if you began using it in the middle of the year.

Example: You buy a $40,000 piece of machinery on December 15. If the half-year convention applies, you get one-half year of depreciation on that machine.

    1. The mid-quarter convention: The mid-quarter convention must be used if the cost of equipment placed in service during the last three months of the tax year is more than 40 percent of the total cost of all property placed in service for the entire year. If the mid-quarter convention applies, the half-year rule does not apply, and you treat all equipment placed in service during the year as if it were placed in service at the midpoint of the quarter in which you began using it.
    2. The mid-month convention: This convention applies only to residential rental property, nonresidential real property, and railroad gradings and tunnel bores. It treats all property placed in service (or disposed of) during any month as placed in service (or disposed of) on the midpoint of that month.

If you’re planning on buying equipment for your business, call the office and speak to a tax professional who can help you figure out the best time to buy that equipment and take full advantage of these tax rules.

Other Year-End Moves to Take Advantage Of

Small Business Health Care Tax Credit. Small business employers with 25 or fewer full-time-equivalent employees (average annual wages of $52,000 in 2016) may qualify for a tax credit to help pay for employees’ health insurance. The credit is 50 percent (35 percent for non-profits).

Business Energy Investment Tax Credit. Business energy investment tax credits are still available for eligible systems placed in service on or before December 31, 2016, and businesses that want to take advantage of these tax credits can still do so.

Business energy credits include solar energy systems (passive solar and solar pool-heating systems excluded), fuel cells and microturbines, and an increased credit amount for fuel cells. The extended tax provision also established new credits for small wind-energy systems, geothermal heat pumps, and combined heat and power (CHP) systems. Utilities are allowed to use the credits as well.

Repair Regulations. Where possible, end of year repairs and expenses should be deducted immediately, rather than capitalized and depreciated. Small businesses lacking applicable financial statements (AFS) are able to take advantage of de minimis safe harbor by electing to deduct smaller purchases ($2,500 or less per purchase or per invoice). Businesses with applicable financial statements are able to deduct $5,000. Small business with gross receipts of $10 million or less can also take advantage of safe harbor for repairs, maintenance, and improvements to eligible buildings. Please call if you would like more information on this topic.

Partnership or S-Corporation Basis. Partners or S corporation shareholders in entities that have a loss for 2016 can deduct that loss only up to their basis in the entity. However, they can take steps to increase their basis to allow a larger deduction. Basis in the entity can be increased by lending the entity money or making a capital contribution by the end of the entity’s tax year.

Caution: Remember that by increasing basis, you’re putting more of your funds at risk. Consider whether the loss signals further troubles ahead.

Section 199 Deduction. Businesses with manufacturing activities could qualify for a Section 199 domestic production activities deduction. By accelerating salaries or bonuses attributable to domestic production gross receipts in the last quarter of 2016, businesses can increase the amount of this deduction. Please call to find out how your business can take advantage of Section 199.

Retirement Plans. Self-employed individuals who have not yet done so should set up self-employed retirement plans before the end of 2016. Call today if you need help setting up a retirement plan.

Dividend Planning. Reduce accumulated corporate profits and earnings by issuing corporate dividends to shareholders.

Budgets. Every business, whether small or large should have a budget. The need for a business budget may seem obvious, but many companies overlook this critical business planning tool.

A budget is extremely effective in making sure your business has adequate cash flow and in ensuring financial success. Once the budget has been created, then monthly actual revenue amounts can be compared to monthly budgeted amounts. If actual revenues fall short of budgeted revenues, expenses must generally be cut.

Tip: Year-end is the best time for business owners to meet with their accountants to budget revenues and expenses for the following year.

If you need help developing a budget for your business, don’t hesitate to call.

Call a Tax Professional First

These are just a few of the year-end planning tax moves that could make a substantial difference in your tax bill for 2016. If you’d like more information about tax planning for 2017, please call to schedule a consultation to discuss your specific tax and financial needs, and develop a plan that works for your business.

DAT News & Blogs

Choosing the Right Business

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When you decide to start a business, one of the most important decisions you’ll need to make is choosing the right business entity. It’s a decision that impacts many things–from the amount of taxes you pay to how much paperwork you have to deal with and what type of personal liability you face.

Forms of Business

The most common forms of business are Sole Proprietorships, Partnerships, Limited Liability Companies (LLCs), and Corporations (C-Corporations). Federal tax law also recognizes another business form called the S-Corporation. While state law controls the formation of your business, federal tax law controls how your business is taxed.

What to Consider

Businesses fall under one of two federal tax systems:

1. Taxation of both the entity itself on the income it earns and the owners on dividends or other profit participation the owners receive from the business. C-Corporations fall under this system of federal taxation.2. “Pass through” taxation. This type of entity (also called a “flow-through” entity) is not taxed, but its owners are each taxed (more or less) on their proportionate shares of the entity’s income. Pass-through entities include:

  • Sole Proprietorships
  • Partnerships, of various types
  • Limited liability companies (LLCs)
  • “S-Corporations” (S-Corps), as distinguished from C-corporations (C-Corps)

The first major consideration when choosing a business entity is whether to choose one that has two levels of tax on income or one that is a pass-through entity with only one level directly on the owners.

The second consideration, which has more to do with business considerations rather than tax considerations, is the limitation of liability (protecting your assets from claims of business creditors).

Let’s take a general look at each of the options more closely:

Types of Business Entities

Sole Proprietorships

The most common (and easiest) form of business organization is the sole proprietorship. Defined as any unincorporated business owned entirely by one individual, a sole proprietor can operate any kind of business (full or part-time) as long as it is not a hobby or an investment. In general, the owner is also personally liable for all financial obligations and debts of the business.

Note: If you are the sole member of a domestic limited liability company (LLC), you are not a sole proprietor if you elect to treat the LLC as a corporation.

Types of businesses that operate as sole proprietorships include retail shops, farmers, large companies with employees, home-based businesses and one-person consulting firms.

As a sole proprietor, your net business income or loss is combined with your other income and deductions and taxed at individual rates on your personal tax return. Because sole proprietors do not have taxes withheld from their business income, you may need to make quarterly estimated tax payments if you expect to make a profit. Also, as a sole proprietor, you must also pay self-employment tax on the net income reported.

Partnerships

A partnership is the relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business.

There are two types of partnerships: Ordinary partnerships, called “general partnerships,” and limited partnerships that limit liability for some partners but not others. Both general and limited partnerships are treated as pass-through entities under federal tax law, but there are some relatively minor differences in tax treatment between general and limited partners.

For example, general partners must pay self-employment tax on their net earnings from self-employment assigned to them from the partnership. Net earnings from self-employment include an individual’s share, distributed or not, of income or loss from any trade or business carried on by a partnership. Limited partners are subject to self-employment tax only on guaranteed payments, such as professional fees for services rendered.

Partners are not employees of the partnership and do not pay any income tax at the partnership level. Partnerships report income and expenses from its operation and pass the information to the individual partners (hence the pass-through designation).

Because taxes are not withheld from any distributions partners generally need to make quarterly estimated tax payments if they expect to make a profit. Partners must report their share of partnership income even if a distribution is not made. Each partner reports his share of the partnership net profit or loss on his or her personal tax return.

Limited Liability Companies (LLC)

A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state is different, so it’s important to check the regulations in the state you plan to do business in. Owners of an LLC are called members, which may include individuals, corporations, other LLCs and foreign entities. Most states also permit “single member” LLCs, i.e. those having only one owner.

Depending on elections made by the LLC and the number of members, the IRS treats an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return. A domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it elects to be treated as a corporation.

An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it elects to be treated as a corporation.

C-Corporations

In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.

A corporate structure is more complex than other business structures. When you form a corporation, you create a separate tax-paying entity. The profit of a corporation is taxed to the corporation when earned and then is taxed to the shareholders when distributed as dividends. This creates a double tax.

The corporation does not get a tax deduction when it distributes dividends to shareholders. Earnings distributed to shareholders in the form of dividends are taxed at individual tax rates on their personal tax returns. Shareholders cannot deduct any loss of the corporation.

If you organize your business as a corporation, generally are not personally liable for the debts of the corporation, although there may be exceptions under state law.

S-Corporations

An S-corporation has the same corporate structure as a standard corporation; however, its owners have elected to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S-corporations generally have limited liability.

Generally, an S-Corporation is exempt from federal income tax other than tax on certain capital gains and passive income. It is treated in the same way as a partnership, in that generally taxes are not paid at the corporate level. S-Corporations may be taxed under state tax law as regular corporations, or in some other way.

Shareholders must pay tax on their share of corporate income, regardless of whether it is actually distributed. Flow-through of income and losses is reported on their personal tax returns and they are assessed tax at their individual income tax rates, allowing S-Corporations to avoid double taxation on the corporate income.

To qualify for S-Corporation status, the corporation must meet a number of requirements. Please call if you would like more information about which requirements must be met to form an S-Corporation.

Professional Guidance

When making a decision about which type of business entity to choose each business owner must decide which one best meets his or her needs. One form of business entity is not necessarily better than any other and obtaining the advice of a tax professional is critical. If you need assistance figuring out which business entity is best for your business, don’t hesitate to call.

DAT News & Blogs

This week is National Truck Driver Appreciation Week. We’ve put together a list of five ways that carriers, brokers, and shippers can show appreciation and respect to a driver, including suggestions from the drivers themselves.

1. Respect the Driver’s Time

An extra 15 minutes held up at a loading dock or stuck in traffic can be the difference between a driver getting home to family and being stuck in the sleeper cabin another night. Drivers take extra care to manage their hours-of-service (HOS) and mandatory breaks so they can avoid situations like that.

There might not be anything you can do about the traffic, but you can help by not detaining drivers any longer than necessary when loading and unloading the truck or counting product. Or if the driver is detained longer than the standard two hour grace period, compensate them for their time. Just like yours, the driver’s time is valuable.

2. Fair Pay

Drivers tend to stay with companies that show that their work is appreciated, and driver retention is a key concern for carriers. Truck drivers have unique skill sets, and with the shortage of new drivers entering the industry, those skills are increasingly rare in today’s work force. That’s why they deserve to be well-compensated for the specialized services that they provide, whether that means getting paid by the hour or by the mile.

3. Honesty

Will the load be available in the morning? Is there anywhere to park the truck if the driver arrives at the destination early? Will there be lumpers, and who’s paying the fee? Are the pallets shrinkwrapped?

Letting the driver know everything there is to know about the load shows that you appreciate what goes into doing the job well.

4. Time at Home

A lot of drivers got into the job because they like the open road. That doesn’t mean they want to live there. Home time matters big time.

For carriers, that means learning your drivers’ preferences. Some may want short runs, while others are happy to be away from home for long stretches. Show your appreciation by doing your best to match each driver with the schedule that best fits his or her needs.

5. Access to Facilities

When drivers arrive at the delivery dock, they’ve likely just spent a few hours behind the wheel. Give them access to the facilities. A couch, cup of coffee, or just access to the bathroom is a simple gesture of appreciation for the person who just safely delivered your valuable freight.

DAT News & Blogs

Identity Theft

Identity Theft and Your Taxes

Tax-related identity theft occurs when someone uses your stolen Social Security number to file a tax return claiming a fraudulent refund. It presents challenges to individuals, businesses, organizations and government agencies, including the IRS.

Learning that you are a victim of identity theft can be a stressful event and you may not be aware that someone has stolen your identity. In many cases, the IRS may be the first to let you know you’re a victim of ID theft after you try to file your taxes.

The IRS is working hard to stop identity theft using a strategy of prevention, detection, and victim assistance. In 2015, the IRS stopped 1.4 million confirmed ID theft returns and protected $8.7 billion. In the past couple of years, more than 2,000 people have been convicted of filing fraudulent ID theft returns. And, in 2014, the IRS stopped more than $15 billion of fraudulent refunds, including those related to identity theft. Additionally, as the IRS improves its processing filters, the agency has also been able to halt more suspicious returns before they are processed.

Here’s what you should know about identity theft:

1. Protect your Records. Do not carry your Social Security card or other documents with your SSN on them. Only provide your SSN (social Security Number) if it’s necessary and you know the person requesting it. Protect your personal information at home and protect your computers with anti-spam and anti-virus software. Routinely change passwords for all of your Internet accounts.

2. Don’t Fall for Scams. Criminals often try to impersonate your bank, credit card company, and even the IRS in order to steal your personal data. Learn to recognize and avoid those fake emails and texts.

3. Beware of Threatening Phone Calls. Correspondence from the IRS is always in the form of a letter in the mail. The IRS will not call you threatening a lawsuit, arrest, or to demand an immediate tax payment using a prepaid debit card, gift card, or wire transfer.

As schools around the nation re-open, it is important for taxpayers to be particularly aware of a new scam going after students and parents. In this latest scheme, telephone scammers have been targeting students and parents and demanding payments for non-existent taxes, such as the “Federal Student Tax.”

People should be on the lookout for IRS impersonators calling students and demanding that they wire money immediately to pay a fake “federal student tax.” If the person does not comply, the scammer becomes aggressive and threatens to report the student to the police to be arrested.

4. Report ID Theft to Law Enforcement. If you cannot e-file your return because a tax return already was filed using your SSN, consider the following steps:

  • File your taxes by paper and pay any taxes owed.
  • File an IRS Form 14039 Identity Theft Affidavit. Print the form and mail or fax it according to the instructions. You may include it with your paper return.
  • File a report with the Federal Trade Commission using the FTC Complaint Assistant.
  • Contact one of the three credit bureaus so they can place a fraud alert or credit freeze on your account.

5. Complete an IRS Form 14039 Identity Theft Affidavit. Once you’ve filed a police report, file an IRS Form 14039 Identity Theft Affidavit (see below). Print the form and mail or fax it according to the instructions. Continue to pay your taxes and file your tax return, even if you must do so by filing on paper.

6. IRS Notices and Letters. If the IRS identifies a suspicious tax return with your SSN, it may send you a letter asking you to verify your identity by calling a special number or visiting a Taxpayer Assistance Center. This is to protect you from tax-related identity theft.

7. IP PINs. If a taxpayer reports that they are a victim of ID theft or the IRS identifies a taxpayer as being a victim, he or she will be issued an IP PIN. The IP PIN is a unique six-digit number that a victim of ID theft uses to file a tax return. Each year, you will receive an IRS letter with a new IP PIN.

8. Data Breaches. If you learn about a data breach that may have compromised your personal information, keep in mind that not every data breach results in identity theft. Furthermore, not every identity theft case involves taxes. Make sure you know what kind of information has been stolen so you can take the appropriate steps before contacting the IRS.

9. Report Suspicious Activity. If you suspect or know of an individual or business that is committing tax fraud, you can report it on the IRS.gov website.

10. IRS Options. Information about tax-related identity theft is available online at IRS.gov. The IRS has a special section on IRS.gov devoted to identity theft and a phone number available for victims to obtain assistance.

If you have any questions about identity theft and your taxes, don’t hesitate to call the office for assistance. Call 480-940-8351

DAT News & Blogs

Tax Planning

Tax Planning for Small Business Owners

Tax planning is the process of looking at various tax options to determine when, whether, and how to conduct business transactions to reduce or eliminate tax liability.

Many small business owners ignore tax planning. They don’t even think about their taxes until it’s time to meet with their accountants, but tax planning is an ongoing process and good tax advice is a valuable commodity. It is to your benefit to review your income and expenses monthly and meet with your CPA or tax advisor quarterly to analyze how you can take full advantage of the provisions, credits and deductions that are legally available to you.

Although tax avoidance planning is legal, tax evasion – the reduction of tax through deceit, subterfuge, or concealment – is not. Frequently what sets tax evasion apart from tax avoidance is the IRS’s finding that there was fraudulent intent on the part of the business owner. The following are four of the areas the IRS examiners commonly focus on as pointing to possible fraud:

  1. Failure to report substantial amounts of income such as a shareholder’s failure to report dividends or a store owner’s failure to report a portion of the daily business receipts.
  2. Claims for fictitious or improper deductions on a return such as a sales representative’s substantial overstatement of travel expenses or a taxpayer’s claim of a large deduction for charitable contributions when no verification exists.
  3. Accounting irregularities such as a business’s failure to keep adequate records or a discrepancy between amounts reported on a corporation’s return and amounts reported on its financial statements.
  4. Improper allocation of income to a related taxpayer who is in a lower tax bracket such as where a corporation makes distributions to the controlling shareholder’s children.

Tax Planning Strategies

Countless tax planning strategies are available to small business owners. Some are aimed at the owner’s individual tax situation and some at the business itself, but regardless of how simple or how complex a tax strategy is, it will be based on structuring the strategy to accomplish one or more of these often overlapping goals:

  • Reducing the amount of taxable income
  • Lowering your tax rate
  • Controlling the time when the tax must be paid
  • Claiming any available tax credits
  • Controlling the effects of the Alternative Minimum Tax
  • Avoiding the most common tax planning mistakes

In order to plan effectively, you’ll need to estimate your personal and business income for the next few years. This is necessary because many tax planning strategies will save tax dollars at one income level, but will create a larger tax bill at other income levels. You will want to avoid having the “right” tax plan made “wrong” by erroneous income projections. Once you know what your approximate income will be, you can take the next step: estimating your tax bracket.

The effort to come up with crystal-ball estimates may be difficult and by its very nature will be inexact. On the other hand, you should already be projecting your sales revenues, income, and cash flow for general business planning purposes. The better your estimates are, the better the odds that your tax planning efforts will succeed.

Maximizing Business Entertainment Expenses

Entertainment expenses are legitimate deductions that can lower your tax bill and save you money, provided you follow certain guidelines.

In order to qualify as a deduction, business must be discussed before, during, or after the meal and the surroundings must be conducive to a business discussion. For instance, a small, quiet restaurant would be an ideal location for a business dinner. A nightclub would not. Be careful of locations that include ongoing floor shows or other distracting events that inhibit business discussions. Prime distractions are theater locations, ski trips, golf courses, sports events, and hunting trips.

The IRS allows up to a 50 percent deduction on entertainment expenses, but you must keep good records and the business meal must be arranged with the purpose of conducting specific business. Bon appetite!

Important Business Automobile Deductions

If you use your car for business such as visiting clients or going to business meetings away from your regular workplace you may be able to take certain deductions for the cost of operating and maintaining your vehicle. You can deduct car expenses by taking either the standard mileage rate or using actual expenses. In 2016, the mileage reimbursement rate is 54 cents per business mile (57 cents per mile in 2015).

If you own two cars, another way to increase deductions is to include both cars in your deductions. This works because business miles driven is determined by business use. To figure business use, divide the business miles driven by the total miles driven. This strategy can result in significant deductions.

Whichever method you decide to use to take the deduction, always be sure to keep accurate records such as a mileage log and receipts. If you need assistance figuring out which method is best for your business, don’t hesitate to contact the office.

Increase Your Bottom Line When You Work At Home

The home office deduction is quite possibly one of the most difficult deductions ever to come around the block. Yet, there are so many tax advantages it becomes worth the navigational trouble. Here are a few tips for home office deductions that can make tax season significantly less traumatic for those of you with a home office.

Try prominently displaying your home business phone number and address on business cards, have business guests sign a guest log book when they visit your office, deduct long-distance phone charges, keep a time and work activity log, retain receipts and paid invoices. Keeping these receipts makes it so much easier to determine percentages of deductions later on in the year.

Section 179 expensing for tax year 2016 allows you to immediately deduct, rather than depreciate over time, up to $500,000, with a cap of $2,000,000 worth of qualified business property that you purchase during the year. The key word is “purchase.” Equipment can be new or used and includes certain software. All home office depreciable equipment meets the qualification. Some deductions can be taken whether or not you qualify for the home office deduction itself.

If you’re ready to meet with a tax professional to discuss tax planning strategies for your business, call the office today. Call 480-940-8351

DAT News & Blogs

Dispatch Trucks

Attend our Seminar, One on One,  3 days, 2 hours per day via Skype.

After you signed up for our 3 day seminar, we will contact you and arrange a schedule at your convenience. You can attend a seminar only by phone, however if you are not familiar with certain forms and documents, we like to show these forms and documents via Skype, scan if necessary and forward them to your email account for an immediate learning process.

The seminar will teach the entrepreneur planning to start a dispatch service business. We will also help you finding clients for your new business. (Free advertising on TruckingSuccess.com and free ads on Facebook and Twitter.) We offer continue support for our clients, even after the seminar has ended, anytime, no additional charge. In addition you will receive a certificate stating that you have attended our seminar and that you are now part of a professional group of  independent dispatchers.

What will you learn attending our seminar?  –  What you need to know starting a Home Based Business  –

We will provide information to successfully dispatch your clients truck(s). We list important business contacts, and provide information about laws and regulations as well as required documents. We describe how to provide excellent customer service, build successful business relationships and effectively manage time and stress. It explains freight volume and facts affecting load availability. It guides you through the process of obtaining your own loads and dispatching your clients truck(s). And you also learn about proper freight handling and important delivery procedures. Finally, we will dispel myths and common misconceptions about the trucking industry, provide you with facts to disprove “truck stop” gossip, and make the process of dispatching transparent. Best of all, we will tell you the truth what you can really earn as an independent dispatcher. We will not give you an unrealistic number, like many of our competitors offer on their websites only to wheel you into their service scam. We came to the realization that these companies don’t care about your success, only their own success, meaning their own revenue. We offer continue support for our clients, even after the seminar has ended, anytime, no additional charge. One more advice, be aware when someone is telling you that you can charge a percentage of the load you are dispatching, you can’t, because you are not a broker and you don’t have a broker’s license. You don’t carry a $75,000 bond and you may be subject to all kinds of lawsuits when things go wrong.

Below you can see one of the important learning tools, the round trip concept.

 

Our Skype ID is: trucking.success

To order click here

Heavy Vehicle Use Tax

Heavy Vehicle Use Tax

Heavy Vehicle Use Tax Update:
Time to file Form 2290

The annual filing for Form 2290 must be
completed by 8/31/16
J. J. Keller is an IRS-approved 2290 e-file provider and we look forward to helping you painlessly file your taxes. You can file online today at 2290online.com:

  • If you have vehicles with a gross weight of 55,000 pounds or more, you must file IRS Form 2290 Heavy Vehicle Use Tax
  • If you have 25 or more vehicles that are 55,000 pounds or more, you must file electronically
  • E-Filing is quick, and you get a laser-printed, stamped Schedule 1 in no time
  • Thousands of fleets rely on us for annual 2290 filing

Visit 2290online.com and e-file today to get your proof of tax payment, which is needed to register annually with your state.

E-filing is quick and easy to do… visit 2290online.com to get started today!

Regards,

2290 Team
2290Online.com

DAT News

Do you have shipper customers who need to move more freight than you can service with the current size of your fleet? You could buy more trucks to move that extra freight, but adding a brokerage is another option. If you already have relationships with shippers, know their lanes, and know the capacity that they need, then brokering their freight could add another source of revenue for your transportation business.

There are 6 steps you’ll need to take before you can start brokering freight.

GROW YOUR BUSINESS

DAT Solutions can help you add a brokerage to your carrier business

1. Apply for operating authority

You’ll have to apply for broker authority through the United Registration System. This will be separate from your carrier authority. You’ll also need to decide how to organize this separate company: sole proprietorship, partnership, LLC, S corp., etc.

Getting your broker authority means you have to designate process agents in every state you’re doing business, just like you did to get your carrier authority. Our fleet services team can help with all the paperwork.

2. Get a broker bond

Every freight broker has to have a $75,000 surety bond or trust fund. It’s similar to the liability insurance required for your trucks, and it’s there to ensure that a carrier can get paid if a broker doesn’t fulfill a contract. The bond covers the entire brokering side of your business. DAT customers can get a broker bond at a special price.

3. File state permits

Some states require extra permits to set up your business, so be sure to check the requirements in your state. DAT Fleet Services can help with that too.

4. Invest in a TMS

Managing your cash flow is key to your brokerage’s success. You’re already familiar with days-to-pay – the number of days a broker has to pay the carrier – but as a broker, you won’t always get money from the shipper before you have to pay the carrier. TMS software like DAT Keypoint is the easiest way to manage your transactions, keep records, and manage the company’s cash flow.

TMS software also lets you manage all your new brokerage’s operations in one place, so you can move more freight with a smaller back-office staff. A streamlined, entry-level TMS like DAT Keypoint Ops requires minimal training and lets you control all your operations on one screen. You can also upgrade it seamlessly to fit your business needs as your company grows.

5. Make personnel decisions

Are you going to be the one working the phones, or will you need new employees? Would you be better off working with independent agents? Will your brokerage share the same office space as your carrier business?

6. Anticipate hidden startup costs

When you started your carrier business, most of the startup costs were tied to equipment. For a brokerage, some of those costs are a lot less obvious – contingent cargo insurance policies, for example. Meet with a business attorney who has experience with brokers. That will save you some headaches.

DAT can help get your brokerage off and running, whether that means getting your broker authority or streamlining your business with broker TMS software. Call 800.551.8847 for more info.

Trucking Success partners with DAT to offer a special on the TruckersEdge load board. Sign up for TruckersEdge today and get your first 30 days free by signing up at http://www.truckersedge.net/promo123 or entering “promo123” during sign up.

How To Start a Truck Dispatch Company

How To Start a Truck Dispatch Company

What will you learn attending our dispatch seminar?

We will provide information to successfully dispatch your clients truck(s). We list important business contacts, and provide information about laws and regulations as well as required documents.

We describe how to provide excellent customer service, build successful business relationships and effectively manage time and stress.

It explains freight volume and facts affecting load availability. It guides you through the process of obtaining your own loads and dispatching your clients truck(s). And you also learn about proper freight handling and important delivery procedures.

Finally, we will dispel myths and common misconceptions about the trucking industry, provide you with facts to disprove “truck stop” gossip, and make the process of dispatching transparent.

Best of all, we will tell you the truth what you can really earn as an independent dispatcher. We will not give you an unrealistic number, like many of our competitors offer on their websites only to wheel you into their service scam. We came to the realization that these companies don’t care about your success, only their own success, meaning their own revenue.

We offer continue support for our clients, even after the seminar has ended, anytime, no additional charge.

One more advice, be aware when someone is telling you that you can charge a percentage of the load you are dispatching, you can’t, because you are not a broker and you don’t have a broker’s license. You don’t carry a $75,000 bond and you may be subject to all kinds of lawsuits when things go wrong.

Below you can see one of the important learning tools, the round trip concept.

 

Our Skype ID is: trucking.success

To order click here

Trucking Business

Trucking Business

Poor health in the trucking business contributing to driver shortage

Hire Right poll finds that 21% of  truck drivers  are leaving the industry due to health issues.

45% of respondents to Hire Right’s survey say they do not offer a wellness program at all. 

A recent survey of 3,500 human resources, recruiting, security, and management professionals by Hire Right found that “health issues” is the reason cited by 21% of truck drivers leaving the industry, with a further 41% saying they’re quitting the profession to spend more time at home.

Kent Ferguson, director of transportation for Hire Right, told Fleet Owner that more transportation companies are recognizing the importance of the truck driver health issue and are doing more to address it.

“We’re finding that wellness programs are becoming a popular retention tactic because of the median age of the driver workforce and the physical demands of the job, as it can be difficult to get proper rest, eat healthy and exercise while on the road,” he said.

“It’s no surprise that living a healthier lifestyle can improve one’s quality of life, and the industry is realizing these kinds of wellness programs are effective methods to boost driver’s overall health and well-being, which ultimately helps retain them,” Ferguson added. “Additionally, the programs are also resonating with drivers because it shows them the companies they’re employed by have the workers’ best interests in mind and are thinking about their quality of life – not just getting the job done.”

  • With the driver shortage expected to worsen this year, 59% of respondents reported finding, retaining and developing talent has become a top business challenge.
  • Where “wellness programs” are concerned, some 35% of respondents offer safety and accident prevention programs, 21% offer free immunization/flu shots and 18% offer smoking cessation programs.
  • Yet 45% of respondents said they do not offer a wellness program at all.
  • Some 31% of respondents indicated a focus on dedicated operations for more home time.
  • Another strategy being implemented to help drivers spend more time at home is load swapping which shortens the periods of time they spend on the road, Ferguson noted.
  • Other tactics being used to attract and retain drivers are increased pay (51%), upgraded equipment (49%) and recognition/rewards programs (41%).
  • Non-monetary benefits are also gaining popularity with 57% investing in driver appreciation events and 35% providing flexible work arrangements – with 10% allowing their drivers to earn bankable home days
  • To improve the “driver on-boarding” process, some 34% of respondents said they are creating longer orientation/training periods, with 32% appointing a driver liaison/mentor for their new drivers.

“While increasing pay certainly helps to incentivize drivers to continue working, [tactics] such as driver appreciation events are also going a long way with regard to boosting morale,” Ferguson noted. “When drivers feel that the commitment they’ve made to this business is appreciated, they’re more motivated to stay on board.”

Truck Dispatcher Course

Truck Dispatcher Course.

Our truck dispatch manual and our truck dispatch course provides all the tools and information an independent Owner Operator or a home based dispatch service needs to successfully dispatch his or her own trucks,  or his or her clients trucks. 

It explains how to set up your mobile office, lists important business contacts, and provides information about laws and regulations as well as required documents. It describes how to provide excellent customer service, build successful business relationships and effectively manage time and stress.

It explains freight volume and facts affecting load availability. It guides you through the process of obtaining your own loads and dispatching your own truck or your clients trucks.  And you also learn about proper freight handling and important delivery procedures.

Finally, our publication and our dispatch course dispels myths and common misconceptions about the trucking industry, provides you with facts to disprove “truck stop” gossip, and makes the process of dispatching transparent.

Every industry, trade, profession, and occupation has established business practices and ethical standards that set certain guidelines how business should be conducted. The primary purpose of these practices and standards is to establish trust among the industry to promote good business relationships and facilitate business transactions.

Therefore it is very important to pick the right load board and deal only with reputable brokerage firms. Our publication and our service will show you how to succeed and where to find the best paying loads from the brokerage companies with a 90+ credit rating.

Trucking Success partners with DAT to offer a special on the TruckersEdge load board. Sign up for TruckersEdge today and get your first 30 days free by signing up at http://www.truckersedge.net/promo123 or entering “promo123” during sign up.

To order our Truck Dispatch Manual Click here

To attend our Truck Dispatch Seminar Click here