Freight Broker Deductions & Tax Tips

After settling down after the busy holiday season, another season is already here – tax season!  Before you know it, April 15th will be upon us but the good news is there are certain business expense write-offs that can reduce the final amount due on your taxes as most freight agents and brokers are considered independent contractors.  Keep in mind that while these deductions can be subtracted from both your regular income tax and your self-employment tax, you first need to determine which expenses are necessary business expenses and exactly how much can be deducted.  Seeking a tax accountant for assistance is definitely wise and recommended.

If an expense is considered ordinary or necessary for your business, it is fully deductible. These expenses may include:

  • Accounting fees
  • Advertising
  • Bank charges
  • Commissions and sales expenses
  • Continuing professional education
  • Contract labor
  • Credit and collection fees
  • Delivery charges
  • Dues and subscriptions
  • Employee benefit programs
  • Insurance
  • Interest paid
  • Internet subscriptions, domain names, and hosting
  • Laundry
  • Legal fees
  • Licenses
  • Maintenance and repairs
  • Office expenses and supplies
  • Pension and profit-sharing plans
  • Postage
  • Print and copy
  • Professional development and training
  • Professional fees
  • Promotion
  • Rent
  • Salaries, wages, and other compensation
  • Security
  • Small tools and equipment
  • Software
  • Supplies
  • Taxes
  • Telephone
  • Trade discounts
  • Travel
  • Utilities

If expenses come from both personal and business usage, they are only partially deductible. Such as:

  • Home office
  • Automobile and transportation expenses
  • Meals and entertainment – only 50% is deductible
  • Gifts -up to $25 per person

Some expenses, even when they are directly related to your business, are never tax-deductible. These include:

  • Kickbacks or bribes
  • Political party or candidate contributions
  • Social club memberships fees and dues
  • Penalties and fines

Keeping good expense records can be a struggle for any small business owner.  One easy solution for freight brokers and freight agents to better manage their business expenses is to create a simple filing system with a folder for each month of the year.  Every month, store the receipts in their respective folder and at the end of the year just hand the box over to your accountant and he does the rest!

It’s simple: The more tax deductions your business can legitimately take, the lower its taxable profit will be which means more money in your pocket to help grow your business.

The above post is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

What does “Courting” have to do with Freight Brokering? EVERYTHING!

I recently had the pleasure of sharing my time with an older married couple. After learning that they had been married over 50 years and were clearly still in the honeymoon phase of their marriage, I couldn’t help but ask them what their secret was for maintaining a long and happy marriage. Which I found to be quite the accomplishment in a society where over 50% of marriages end in divorce. The gentleman’s answer came quick and was simple:  Never stop courting each other.

Being in the logistics industry, that message hit me like a freight train! Immediately, I could envision how freight brokers and freight agents could apply this principle towards their freight broker business to never stop courting.

What’s more is that this advice could be applied to the freight business or any business. For instance, when you meet the one you want to spend your whole life, do you treat them well or poorly? Do you court them or do you ignore them? The answer to both is obvious.

Just as a couple puts their best foot forward during the initial dating period, overall happiness and the desire to continue in the relationship depends on certain “needs” to be consistently met. The same principle can be applied to the freight broker/customer relationship.

Courting the Marketplace

For freight sales agents, building your book of business is no picnic but it is a necessity. If you’re doing it right, a LOT needs to happen even before that initial phone call is even made; researching prospects, building sales intelligence, getting past the gatekeeper, even creating the perfect voicemail message. And this process needs to happen each and every day. Like they say, if you’re not growing – you’re shrinking. But, after a while of courting the marketplace, you may feel the urge to stop. To stop building your contact lists. To stop reaching out to new prospects. To stop making calls. You begin to just coast along. (The-not-so) funny thing is, the problem with coasting is that you can only coast downhill! Freight brokers must continuously court the marketplace.

Courting Prospects

Industry success is similar to high school dating. Remember this guys? Seeing a girl who caught your eye and made your heart jump a little? Then, eventually, you’d gain enough courage to ask her out on a date. If she said yes, you took her out and courted her. If you wanted her to be your girlfriend, you courted her even more. The same process can be applied to your freight broker business by reaching out to three new contacts each day; you’re actually courting your prospects.

When turning a prospect into a customer, the challenge for most freight brokers is they don’t court their prospects the way they court the love of their lives, thus hindering the probability of success in the process. Most freight agents will court a prospect once and then stop. This is the equivalent of going on a first date and never calling the person again. If you want a long and lasting relationship with your customers, this isn’t going to cut it.

Courting Your Customers

When it comes to your customers, if you desire to have a long and lasting business relationship, you must court them. You must treat them like they’re someone you want to stay in your life forever. The more you court your customers by continually solving their problems and being relentlessly positive, the more freight you’ll move for them – period!

Continue applying that process to your customers by regularly following up and continuing to court them, year after year. A good habit to get into is to ask yourself these questions every day:  What have you done today to court your customers? Whose problems and drama can you solve? Whose day could you light up by taking a large load off their hands? How could you surprise and delight your customers today?

Court the marketplace, court your prospects and court your customers continually. Your success as a freight broker in this industry demands it!

Bonus Tools and Tips on Courting:

Be Appreciative – Always remember to say thank you, take your customers out to lunch, send a pizza to their office, mail a handwritten thank you note (or Birthday/Holiday card), invite customers to company events (like a golf outing or cookout), give away some company swag, pay them a visit – a little face-to-face goes a long way.

Be Attentive – Regularly follow up with your customers (via email, phone, visits), give your full attention during conversations (people know when you’re not paying attention), ask if they’d like to get the company newsletter, call back when you say you’re going to, if they reach out to you and you don’t have the time – make the time! Remember, if you stay at the forefront of their mind, you’ll stay miles ahead of your competition.

Be Helpful/Solve Problems – Check-in with your customers often and listen for issues, be proactive in keeping your customers (it’s easier to keep a customer than obtain a new one or gain one back), be genuine in your interest when following up (people can sense a feigned interest), offer additional services (i.e. different shipping modes), follow through (ex. even if their problem is accounting-related, stay with them on the issue until resolution).

Be Positive – Whether in person, on the phone or in email – keep the tone upbeat and positive, always. Attitude is everything and despite “good intentions”, if they don’t like your tone, demeanor or attitude, they’ll go elsewhere. Take the call and sound happy (smiling actually does come through over the phone). If it pertains, say Happy Birthday, congratulations, etc. Be human – crack a joke (keep it tasteful), talk about their interests (sports/hobbies, etc.), make small talk (not to add ‘filler’ but to create a bonding effect – such as recent crazy weather, weekend plans, an article or industry news they might find interesting, etc.)

Be Consistent – Consistency builds trust and speaks volumes about your character. Whatever you start doing (a weekly phone call, sending birthday cards/newsletter, yearly visit, etc.) continue doing. There isn’t the saying, “Consistency is everything” for no reason.

Logistic Dynamics Freight Broker Blog

Learn and discuss topics of interest for freight broker agents, carriers and shippers.