When I was building my trucking business, one of the biggest bookkeeping mistakes I made early on in my career was not recording the depreciation correctly. If you’re a new owner/operator & need to keep your cost down, I highly recommend being your own bookkeeper and updating your Quickbooks weekly as opposed to end of the month or quarter. If your consistent with your approach, it will make it easier on you in the long run and you’ll have a better sense of what financial position your company is in at all times.
First off, I’m not a CPA or an accountant…just a trucking insurance agent that had previously built a trucking business and passing on my experiences. For my business, I’ve sold and purchased about 30 trucks over the last decade. After the first few trucks, I always purchased new trucks and stack with an extended warranty with no money down and would depreciate the asset over a 60month note. When the truck was paid off and warranty expired, I would then sell off that truck and reinvest the profits back into the next truck.
How do we depreciate the truck & trailer for your new start-up trucking business? Each month when you’re making your truck payment, the interest portion of each payment should be a listed expense you can deduct. The actual truck note will be amortized and listed as an asset. To expand, let’s assume you purchased a $50,000 truck and a $25,000 trailer. You have the option to take a Sec. 179/Bonus Depreciation and write off the truck the first year…however, when your new you already have a lot of expenses. I would encourage you to amortize the truck and trailer (trailers have a 3-5 year useful life) over the 5year period. Now that you have listed the truck & trailers as assets in your quickbooks account, you can deduct $10,000/yr for the truck & $5,000/yr for the trailer.
If you have any questions, I’d advise you to set up a meeting with a local CPA that specializes in trucking and have the educate on how to set up your QuickBooks account. Good luck!