Tips for New Freight Brokers | Final Mile 127

Welcome back for another edition of the Final Mile. It's where we answer your questions. Um, these ones today came from we had one, I think, was via email. And uh another really good one where there's a bunch of questions in our Facebook group, but I thought it was worthy of a good discussion. So um we'll get into those in a second. But make sure to check out all of our other content at freight360.net. You'll also find the Freight Broker Basics course if you're looking for a training option for your team. Share this with your friends, like, subscribe, all the good stuff that helps the algorithm. Let's get right into it, Ben. First question it's tax time. What tax tips do you have for brokers? Um, so I actually I had this discussion with a bunch of my agents who were kind of newer and it was their first time being 1099. So I I'll speak to it from the 1099 side. The W-2 side, I really don't think this is going to apply because you're just an employee. But if you're a business owner or a 1099 for a brokerage, what I always recommended to people is have a business bank account. So, like if you're an agent, right? If you're a business, you're gonna already have the LLC in the business account. If you're an agent, establish that LLC, have your business account, and then run all of your expenses and all of your income through that account. That way you don't have to keep track of receipts, you don't have to try and write things off because the expenses literally just flowed right through your business, right? Like if you I mean, we you and I, uh, even with Freight 360, right? We're we're not a brokerage. Um, but the same thing applies, right? We've got a business bank, business debit cards, right? And the business expenses are paid right out of that instead of if you remember early on, we used to like keep track of what I paid for, what you paid for, and and level it out. Um, but just run it right through, and then I'm not a tax expert, but talk to your tax pro and make sure that is there anything that you might have missed that you didn't run through your business or anything that you can write off because um you spent that money, or you know, maybe it was mileage or wear and tear on a vehicle that doesn't necessarily show a receipt, um, things like that. But um, that's my recommendation there. And then as far as like um a way to help you reduce your taxable income through like a retirement plan, you your um a financial advisor, if you've got one, right? They can help talk you through, like if you're if you're an entrepreneur, right? You're not gonna necessarily have a 401k, but you can set up a like a solo 401k or a um, obviously you've got like your IRA and things like that, but find other ways that you can take money if you're gonna invest in a retirement and reduce that taxable income. You know, and that's gonna go, that's a traditional way versus a Roth. So you're gonna have um the tax deduction on the front end versus um you know investing in post-tax. But those are kind of my big ones on like the reducing the taxable income and just properly managing your books. When I was talking to one of the guys like a month or so ago, he was literally running every like his work phone, his bills for his internet, and like everything he's doing through his personal account and like trying to remember like what he spent money on. And I'm like, dude, I'm like, now you've got like you have to go through your bank account and look at like so much work. Oh, yeah. This right there was a I charge, I took my girlfriend out to dinner. This one right here was for my cell phone bill for work. This one right here was for my you know, my prospecting software. This is this money that came in is a commission payment from the company. This money that came in is my buddy Venmoing me. Like some are related, some aren't. It's very, very, very messy. But anything um that you've ever advised people on or done yourself that you think is good, takeaway as we're heading into tax season here.

Yeah, I mean, like for sure what you said. Like, have a business, have a business account, have a business debit card, and use the debit card for everything related to your business. Then you don't have to keep track of it, right? So, like computers, cell phone. Um, honestly, like here's the big buckets, right? All the technology you're gonna spend for your brokerage is like the one bucket, like in your internet. The second big bucket is health insurance, which becomes a business expense and you can write off all of it. So, like co-pays at the doctor, prescriptions, anything related to like healthcare. Like you have like a health, what do they call them? Like health savings account, HSA or whatever.

Yep.

But like as a business owner, like that is a business expense, like your health insurance and those things is like another big bucket. The other bucket, too, is like leasing versus owning your car. Like when I've owned my vehicles, I had to do it by mileage. When I've leased them, it ends up being a larger percentage and it gets easier to do. So like I've leased my cars for the past few years instead of owning them. I owned mine in the first year we owned the business. I've leased them since, and I get a larger write-off percentage. And my car payment is actually like cheaper because of the tax write-off and how it's leased versus owned, is a another bucket.

And then Yeah, a good accountant can give you like clear sound advice too. Because like, depending on what state you're in, you might have this state income tax. Like, you don't have state income tax in Florida, but I have it in New York.

So for sure, like I mean, where all this came from is like I have a really good accountant that does our books and mine and for the other businesses, but like there's quite a few things that you probably aren't doing that you could take into account because like you want to be able to run everything that the tax code allows you to write off, right? So, like it makes way more sense usually to pay an accountant twice as much to do your taxes and to be able to talk to them throughout the year than to do them yourself. You end up with a lot more money at the end of the year and avoid paying a lot into the taxes. And again, 401k is another one. A lot of those things are tax deductible. The one that surprised me that isn't is um like life insurance. Life insurance, you don't want to pay with your business because if something happens, the money in the insurance policy goes to the business and then it becomes income for the business and taxable. But if you pay life insurance personally, it is not a taxable event. And if something whether it happened to me or you, like our family gets to keep more of it. So, like that was the one that I was kind of surprised. It makes more sense to do personal, but like there's a lot, right? And there's a lot of things you probably don't even think of, right? Like if you're going and buying anything for your office, so like the phones, right, are the easy one, but also cell phone, also internet. Like anytime you're buying anything for work, like AirPods, stuff that you use at work all day, right? Like that stuff adds up over the year. And the thing that really matters most is like that business debit card takes all the work out of it. You're gonna buy something and you just go to yourself, is this for business or is this for personal? And you just use one or the other, and you don't have to remember it. You don't need to save the receipt, you don't need to do anything with it. You just put it through there. Any software you use, Zoom info, you're paying for your own CRM, you're paying for another email address, like all those little$15,$25 charges all sit on like the business side. Another one, and like this is something I would ask the accountant because our situation's a little different, but like all the books I read and buy are a business write-off. And it's mostly because like the books I'm reading are directly applicable to like coaching and consulting and things, but like that number adds up throughout the year.$25. I'll read three or four books a month sometimes. Like that ends up being like a thousand to fifteen hundred bucks a year that is another tax write-off that like the other one, too, is like a home office space, a portion of your of your house.

And I had I I don't remember off the top of my head, but I remember asking my accountant years ago about this, and he gave me a really good explanation on like you know what you could do, what the ramifications are. Um because if you write off a portion of your house, then when you go to sell it and it's been depreciated, then you end up having to like um repay, or I forget what it is, but ask your accountant if you're gonna go that route. Um, but good question. Good question. It's tax time. So all right. Next, this is a group of questions. I'm gonna read through them and then we'll kind of break it down. So this said uh question for brokers who've been doing this a while. Where do you usually get a sample rate confirmation? What system or TMS do you use that auto-creates rate cons and forms? What forms do you actually keep on hand as a broker? And what do you use to vet carriers before booking? So a lot of like this is someone getting set up. I'll I'll try to analyze through it. And um, we have recommended a send TMS for many, many, many, many years. Um, if you're looking for like an all-in-one software as a newer broker, check them out. We have a um a link with a referral code in the description. You can get 90 days for free of their pro version, no credit card needed. Just go and sign up. Um, so a sample rate confirmation, uh, your TMS should have it. Like there should be a repository of like most of your model forms and contracts, et cetera, already in there. Um, I will also tell you, like, if you're a TIA member, there's a lot of model contracts that you can get access to there. As far as the rate confirmation, the most TMSs will generate it and you should be able to customize um, you know, notes on it on a per load basis, the notes on it maybe on a location basis or a customer basis, and definitely make sure that it you're able to like put your company's name and logo and its stuff in there, and um, you want to have like the correct verbiage in there. Um as far as like the verbiage, like you and I, like every company's gonna be a slightly different. Like you and I have all like kind of like passed back and forth, like, hey, what do you guys have on your acon? What do we have on ours? Um, certain disclaimers on requirements that you have for the load and you know, fines that might be included in there, or requirements for tracking, or you know, things of that nature. Um, but your TMS really should have a baseline rate confirmation to get you started. Um and then as far as like auto-creating the Raycons and Forums, check out a send TMS. That's a system we'd recommend. There's some other ones that we've we've talked about over the years as well. Just make sure that depending on where you're at in your journey, make sure the the cost of it makes sense for what you're doing. So, like you don't want to go buy a McLeod when you're just getting started as a single person because you're gonna it's you're gonna pay six figures to buy a lifetime license. Um, and you just don't need it. You don't need what it can do when you're not at that size. Um, what about the forms? Which one as far as keeping them actually physically on hand? I don't keep anything paper right now.

I think I think what they mean, like here, my interpretation is like you're gonna keep your broker carrier agreement inside, which is the next question, your carrier onboarding software, or it'll be a copy will be in your TMS. And every time you onboard a carrier, they sign that once, and that's good indefinitely. The other forms or paperwork you'll keep on hand, right? Is a signed Raycon that comes back from the carrier, that'll get saved in your TMS. Then you're gonna, I think a good practice is when your customer tenders you a load, either via email or through a system, that should be saved in your TMS. And then you also should have, once the load is delivered, the BOL, once it's signed, becomes a proof of delivery. That will get saved in your TMS after the load's been delivered, as well as your carrier invoice that usually comes with the POD, that also gets saved in your TMS. Those are all the documents pretty much that you have saved.

And you alluded to it, like your carrier vetting onboarding system will usually assist you with the carrier agreement. The insurance, too, they'll usually be like a cert holder. So whether you're you're on like a highway, my care, my carrier portal, RMIS, et cetera. Being able to have the insurance that comes, it's either they're either a cert holder, so they've got it from the insurance agent, or if you're doing it manually, like I remembered the old school way, um, we had to get it from the insurance agent, but you want that on file, so you know um, you know, that that they are insured and whatnot. But yeah, that's a those are all very good. I think what you point out that's great is if your TMS can image documents or upload and save documents, it's a you really want that feature because if you've got to go reference something three months down the road, you don't have to like look through a stack of printed files or a folder on your desktop. It should be like, hey, let me open up load one, two, three, four, five, six. All right, here's all the associated documents. I've got a tender from my customer that's just a saved email or a PDF. I've got the rate confirmation signed and accepted from the carrier. Um, I've got the signed bill of lading uh back from the carrier. I've got my invoice that I sent to my customer, um, et cetera. So all those things really should live at the load level. And then your carrier portion of your TMS should hold the broker carrier agreement. Um, if it's a co-brokerage relationship, the co-brokerage agreement, um, insurance. So, like your COI uh certificate of insurance, usually it's on a Cord 25 form. Um, those should all live in the appropriate area, right? Like if it's a customer contract or a customer co-broker agreement, it should live in the customer's record. If it's a load type document, rate confirmation, etc., load tender in the load level. It's a carrier agreement in the carrier record, but yeah. Um, and then you know, the vetting, we've talked to vetting platforms. Um check them all out depending on what you like. There's just so much out there. Um I mean, you've got gen logs, highway, RMIS, MCP, carrier assure, um, uh search carriers. I mean, there's like there's just so many out there, and there's so many methods where you can blend the use of a system and then implement an internal procedure, marry them up, and then you're gonna you know definitely A to Z cover your butt on uh properly vetting. And we've got entire episodes on carry vetting, so check that out in our on our website. Um but any other thoughts on any of those questions?

No. I mean, I I think we pretty much covered all of them. Um deal.

Sweet. We'll keep sending your questions our way. We'll continue to answer them. We can't always get to everybody's question, um, but we appreciate you guys for reaching out to us. Final thoughts, Ben.

Whether you believe you can or believe you can't, you're right. And until next time, go bills.