There are three types of audits that an owner-operator or fleet manager may have to face.
- DOT compliance review.
The IRS audit is what anyone might face. Income, expenses, taxable activity. It’s what accountants live on.
The IFTA audit follows a questionable IFTA filing or failure to pay the IFTA taxes. Best to have all those fuel receipts and mileage records handy for that one.
The Department of Transportation (DOT) compliance review checks out the safety and maintenance of equipment.
Doesn’t matter which one we face, none of them are fun.
The Odds of Being Audited
Nobody wants to be audited.
Probably, audits are caused by a red flag going up somewhere, like a roadside inspection or an accident. But it’s also possible to be random because DOT inspections are part of the trucking industry. That doesn’t make them less stressful.
The odds of being audited at some point in your trucking career are pretty high. Are you the type that’s going ride it out then, or the type that’s going to prepare for it now?
The best defense is a good offense. By keeping up with the numbers we must track and keeping our rigs safe, we not only make being an owner-operator easier day- to-day, but also reduce audit anxiety when it does happen.
So how do owner-operators get ready?
It’s all about the records. Audits are focused on what you’ve done in the past. Records are the proof that an owner-operator or a fleet manager has done what they need to do to be safe on the road.
What Do You Need?
You need two things with an audit.
First, you need up-to-date and complete records.
Second, you need to be able to get them quickly and easily.
Some trucking software only does invoices, or only does dispatch and routing. A complete package gives owner-operators all the tools to organize their business. That’s critical if the auditors show up. Auditors want data and they like it when you can get it for them quickly.
Audits happen for a lot of reasons. But that doesn’t make them easier to deal with. It will give you peace of mind knowing that you’re organized and ready for the audit. If you have to go through an audit, it might as well be done as quickly as possible. And in these days of online meetings instead of in person, it’s really easy to show the data using a meeting program like Zoom or Microsoft Meeting.
The sweet part of being prepared for an audit means everything else in your business is working and organized. (Yeah, it’s really the other way around, but it’s good both ways, right?)
If you’re still using a shoebox and envelope storage system for your records, then an audit is going to be… bad. Really bad. No one can be prepared to face any auditor if all the receipts and records are disorganized and scattered.
How to Face the Audit
The obvious solution to any data management is a computer system.
Your business records will be checked and rechecked in an IRS audit. Being prepared with correct figures in an accounting standard format will help speed up the process. So you need an accounting system that tracks the flow of money in your organization: invoices, expenses, fuel purchases, living expenses, maintenance costs, insurance payments… you know the drill. An accounting software package can manage all of this for you.
The IFTA filing must be done, even if you don’t drive an inch in the quarter. You have to go into the report all zeros in that case – but don’t skip the filing. Even if you don’t owe a dime, you’ll pay penalties and fines for failure to file. Let’s not go there.
That standard accounting package isn’t tracking the details you need for an IFTA filing or audit. You could get a stand-alone IFTA filing software or use one of the online options when the standard accounting package won’t provide the data needed. But will the IFTA software give you the data when you need it? Some of those so-called “free” IFTA programs you find online don’t save your data after you print out your report – so you’ll have to enter it all in again.
DOT Compliance Review
Accounting software is going to show who and when you paid for maintenance services. It might show when you purchased tires or oil changes. Accounting software is not going to show maintenance logs.
The keys to a successful audit are simple: have your information and records handy, and be able to provide what they ask for immediately. That’s the power of computers. They’re built to do that.
Shoeboxes Vs. Systems
It’s obvious that a better solution than the shoebox is a software program that can handle these audits.
What every trucking concern needs, regardless of size, is a system that covers all of those audits. Because each number in your business applies to all of them. Your mileage reports apply to your company expenses, your IFTA filing, and your maintenance of brakes and tires. Your dispatches include routings through different states and/or provinces, which apply to IFTA tax rates.
The complete trucking business software is going to prepare for all three audits. Using stand-alone products or this accounting software and that maintenance records program that won’t integrate means more work at a desk and therefore, less time making money on the road.
This is where TruckingOffice makes all the difference
Whatever type of audit, TruckingOffice has the data you need to face an audit with confidence. That data collection starts with the dispatch, flows through the trip with expense records to delivery, then sends a BOL along with the invoice. Maintenance records are kept along with those expense records but also allow scheduling of future equipment maintenance.
All with the same numbers. You enter everything once, and TruckingOffice does all the rest.
You won’t have to worry about the audit. You’ll be ready to provide everything they need.*
Audits are most stressful for owner-operators. TruckingOffice software provides owner-operators with the peace of mind that they’re ready.
To find out more about the ways trucking software can benefit owner-operators regarding taxes and in other aspects of the business, start your free trial with TruckingOffice today!
*While we are confident in our software that it meets accounting standards, this article is not professional legal or accounting advice. If you have questions, you may want to contact a local professional for audit support.