Many years ago, I started my transportation business as a DBA (Doing Business As). I had heard very good things about how productive it was to own your truck and, indeed, in those days, the profit margin was very good. After a few years, without having it planned, my business grew and I had more trucks. I had people who helped me, family and friends, and the business was conducted in an efficient way, generating advantages for everyone that participated. However, not everything was well. The Internal Revenue Service (IRS) appeared and audited us year after year, leaving our business with a huge tax debt.
The story above is a common case in the transportation industry. All these problems can be avoided if you seek, from the beginning, professional services and a correct guidance regarding a business plan that covers all administrative and legal aspects.
The first thing to do is to find a professional that knows the industry and who has credentials as a Certified Public Accountant (CPA), IRS Enrolled Agent before the IRS, or a Tax Attorney. Friends and family can advise or recommend someone to you and you can also consult the magazines that are specially aimed to the transportation sector, such as El Trailero Magazine, where you can find different professionals who are dedicated to provide services in this sector.
How do you know if your professional has the necessary credentials for the services you need? Nowadays, we can find all kinds of information on internet, and especially professionals’ records. The IRS offers us on its website https://irs.treasury.gov/rpo/rpo.jsf to search and verify the credentials of the professional you chose. You only need to enter this person’s last name and zip code and it will immediately give you the result and verify what kind of credential this person has.
Once you find the professional, this may suggest, based on their knowledge and experience in the industry, which kind of entity will be the most suitable for your business. The most important thing is giving you a broad explanation of the advantages and disadvantages of each type of entity.
Remember that a business, on top of being productive, needs to be properly advised by a professional who has knowledge of the industry; otherwise all your profits will go to the IRS coffers because of mismanagement.