The financial side of running a trucking company: a guide for Canadian carriers

Trucking is a business of thin margins and big numbers. A tractor can cost more than a house. A month of fuel can cost more than a car. And the money for a load arrives weeks after you've paid to haul it.

This guide covers the financial side of running a trucking company in Canada, whether you're an owner-operator with one truck or running a small fleet. Each section explains what you should be thinking about, and links to an article that goes deeper with worked examples.

Know your cost per kilometre

Every other financial decision in trucking starts here. Your cost per kilometre tells you which loads to take, what to quote, which lanes to drop, and which truck is costing you money.

Work it out by splitting your costs into fixed costs (payments, insurance, plates, permits) and variable costs (fuel, repairs, tires). Then add your own pay, because a business that only breaks even after you work for free isn't really breaking even. And count the deadhead: the empty kilometres to your next pickup cost just as much as the loaded ones.

In a fleet, track it by truck. An older, paid-off unit can easily cost more per kilometre than a newer one with a payment.

Go deeper: Cost per kilometre: the number that decides which loads to take

Manage the cash gap

You pay for fuel and drivers this week and get paid for the load in 30 to 60 days. The faster you grow, the more cash that gap swallows. That's why profitable carriers still run short of money.

What to think about:

• Get paid faster for free: invoice on delivery, send complete paperwork, follow up at 30 days.
• Know what factoring costs: a 3% fee on 45-day invoices works out to roughly 26% a year.
• Keep three reserves: repairs and tires, GST/HST, and income tax, in separate accounts.

Go deeper: Cash flow for carriers: settlements, factoring and fuel cards

Fuel tax and IFTA

If your trucks cross provincial or state borders, you'll likely need an IFTA licence and a quarterly fuel tax return. That return reports kilometres and fuel by jurisdiction, so you pay each jurisdiction its share of fuel tax. The return is only as good as your trip and fuel records, and missing records are the most common audit problem.

Go deeper: IFTA for Alberta carriers: records, returns and common mistakes

GST/HST on freight

Most carriers need to register for GST/HST, charge it on their freight, and claim back the GST/HST they pay on fuel, repairs and trucks. Trucking has its own wrinkles. The rate you charge can depend on where the load is going, and some cross-border freight is taxed differently. The GST/HST you collect isn't your money. Set it aside as it comes in.

Go deeper: GST/HST for trucking companies

Paying drivers the right way

Driver pay is often a carrier's biggest cost, and one of its biggest risks. Things to get right:

• Employee or contractor? Treating drivers as contractors when they're really employees (often called "Driver Inc.") is a major focus of federal enforcement, and the back-payments and penalties can sink a small carrier.
• Which rules apply? Carriers that cross provincial or national borders generally fall under federal labour law, not Alberta's.
• Mileage pay, per-diem and overtime all need to be set up correctly in payroll.

Go deeper: Paying drivers: employees, contractors and "Driver Inc."

Trucks, trailers and depreciation

You can't deduct the cost of a truck all at once. It's deducted over several years through capital cost allowance (CCA), and heavy trucks have their own CCA class. When you buy, trade in or sell a truck, the timing and the paperwork can change your tax bill by thousands of dollars. Lease or buy is a cash-flow decision as much as a tax one.

Go deeper: Trucks, trailers and depreciation: what carriers need to know about CCA

Meals on the road

Long-haul drivers can deduct a higher share of their meal costs than most people, whether they're employees or owner-operators. The rules depend on how far you are from home, how long you're away, and the weight of the truck. Good records make the difference between a claim that holds up and one that doesn't.

Go deeper: Meals on the road: what long-haul drivers can claim

Should an owner-operator incorporate?

Incorporating can lower your tax while you build up money in the business. It also costs more to run, and it isn't right for everyone. For owner-operators who drive for a single carrier, there's an extra risk: the CRA may treat the corporation as a "personal services business" and take away most of the tax advantage.

Go deeper: Should an owner-operator incorporate?

Build a month-end routine

Most of the problems in this guide are cheap to fix when they're a month old and expensive when they're a year old. A short monthly routine covers reconciling bank accounts and fuel cards, matching every load to an invoice, recording kilometres by jurisdiction, checking driver pay, and producing a one-page summary by truck.

Go deeper: A month-end checklist for trucking companies

Getting help

You don't have to do all of this yourself. Most of our trucking clients hand us the whole financial side, from fuel cards and settlements to payroll, IFTA, GST/HST and year-end, and get back a short monthly summary. See how we work with carriers, or book a free call.