How to Build a Budget as an Owner-Operator

Trucking is one of the most important industries in the country. According to data published by the United States Census Bureau, there are more than 700,000 trucking businesses nationwide. Independent owner-operators make up a significant portion of truckers. It can be an excellent business opportunity. A 2019 report from found that the average owner-operator makes more per hour and gets more work than the average company-employer truck driver. 

At the same time, owning and operating your own trucking business comes with some unique challenges. There are additional responsibilities. Among other things, it is crucial that owner-operators keep a comprehensive, well-organized budget. At Williams Accounting & Consulting, we want to make sure you have the tools you need to run your business. Here, our trucking accounting & consulting team offers some tips for building a budget as an owner-operator. 

Step #1: Start With a Detailed Household Budget

An owner-operator is a trucker who owns their own business. One of the unique challenges of being an owner-operator is that your business finances are more closely linked to your personal finances. For this reason, it is important to start by creating a detailed household budget. The Federal Trade Commission (FTC) explains that a budget is simply a “plan that shows you how you can spend your money every month.” There is no one right way to make a personal budget. That being said, well-crafted household budgets share some important common characteristics. Your budget should: 

  • List your household monthly income, both for yourself and, if applicable, your spouse; and
  • List your total average monthly costs, such as food, mortgage, car payments, and insurance. 

The primary purpose of a detailed household monthly budget is to clarify your current financial position. You need to know exactly how much money you have coming and going out each month. With a comprehensive, accurate household budget as a baseline, you will be in a better position to launch your owner-operator trucking business. 

Step #2: Prepare Your Business Budget

Owner-operators are working for themselves, running their own business. For that reason, their personal budget is closely intertwined with their business budget. Nonetheless, it is crucial that owner-operators in the trucking industry keep a separate business budget. To the maximum extent possible, you will want to be sure that your business expenses and business income are easily differentiated. This is helpful for both running a successful company and for tax purposes. Once again, your business income (profit/salary) is a function of your income and your costs. As an owner-operator in the trucking industry, your costs can be divided into two broad categories: 

Fixed Costs

In business, fixed costs are costs that do not change based on production. Put another way, fixed costs are your overhead expenses. They are the costs that you are going to have to pay each month regardless of how much you drive or how much your trucking business makes. For owner-operators, some of the most notable fixed costs include: 

  • Trucking payments;
  • Insurance payments; 
  • Plates and trucking permits; 
  • Federal & state self employment taxes; and
  • Business accounting and tax services. 

Variable Costs

In contrast to fixed costs, variable costs are the expenses that change based on a company’s sales/production. The most straightforward type of variable cost is gas. The more you drive, the more gas you are going to be required to purchase. For owner-operators in the trucking industry, some notable examples of variable costs include: 

  • Fuel & oil expenses;
  • Highway tolls and user fees; 
  • Routine truck maintenance; 
  • Vehicle repairs; 
  • Office supplies; and 
  • Meal services. 

Step #3: Stay on Top of Your Finances

For business owners in the trucking industry, the importance of staying on top of your finances cannot be overstated. Owner-operators should always keep an up-to-date budget. In an article published in the Harvard Business Review (HBR), researchers noted that staying up-to-date with business budgeting is important for three key reasons: 

  1. Once a company falls behind on its budget, it can be especially cumbersome and time-consuming to catch up; 
  2. Businesses with accurate budgets will be in a better position to improve their efficiency, including cutting down on unnecessary costs; and
  3. Companies with inaccurate financial books are at a heightened risk of running into tax problems. 

Ultimately, budgeting is about ensuring that owner-operators have the knowledge and information that they need to exercise control over their business and make the best decisions. With clear metrics in mind, business owners will be able to assess their company and make improvements wherever possible. 

Step #4: Be Ready to Get Help from an Accountant Professional

Truck drivers who own and operate their own business often already have a lot on their plate. It is not always the best use of time for owner-operators to handle their own books. The good news is that cost-effective professional help is available. At Williams Accounting & Consulting, we provide comprehensive budgeting services to business owners in the trucking industry, including bookkeeping and tax preparation. Accounting & budgeting services can be customized to support the specific needs of a business. You and your company may want support with: 

  • Budgeting; 
  • Business planning;
  • Bookkeeping; 
  • Financial statements; and
  • State & federal tax preparation. 

For self-employed individuals, including owner-operators in the trucking industry, accurate financial books can make a huge difference in the long-run, especially as it pertains to tax matters. It is essential that your business expenses are properly documented and accurately recorded so that you’re in the best position to minimize your state and federal tax burden. 

Contact Our Trucking Consultants for Immediate Help With Budgeting and Accounting

At Williams Accounting & Consulting, we offer cost effective, reliable solutions for your business success. We have extensive experience working with business owners in the trucking industry. If you have any questions about building a budget as an owner-operator, a skilled professional can help. Contact us to learn more about how we can help. With office locations in Atlanta and New Orleans, our professionals provide business accounting and business consulting services throughout the surrounding areas in both regions. 

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