Tax & Accounting Resources for the Transportation Industry

Over the past year, the transportation industry has encountered tremendous change. There have been numerous things impacting how the industry functions. This tax and accounting resource guide supplies insights and reference material for your transportation business and reviews some of the recent changes in the industry.

SEE BELOW FOR TAX & ACCOUNTING RESOURCES

THE NEW NORMAL – COMMON QUESTIONS WE ARE HEARING FROM OUR TRANSPORTATION CLIENTS

Our transportation team has been getting many questions about how to navigate a business through this pandemic. We discuss a handful of questions and answers in this blog post.

CONTENTS

$

Lease Accounting Changes

$

SALES TAX & NEXUS ISSUES

$

DRIVER shortages

$

Transportation Industry Benchmarking

$

Tax law changes

$

Additional Resources

Lease Accounting Changes

The lease standard has been delayed twice in the last year and is currently scheduled to be implemented in years beginning after December 15, 2021. The new lease accounting rules will have a significant impact on the financial statements of transportation companies leasing real property, equipment, vehicles, and other fixed assets. Transportation companies need to know the ramifications this will have on their total financial statements and bank or bonding covenants.

Click to read: 5 Ways the New Lease Accounting Rules will Impact Transportation Companies

This standard will increase a company’s current liabilities, and if banks opt not to remove this new liability from covenant calculations or change the benchmark, a historically easy ratio to obtain may become an impossible hurdle. The lease standard will also require estimates of how many extensions of a lease will be exercised and, based on the wording in the lease, expenses like operating costs and real estate taxes may be included in the newly recorded liability.

Transportation companies should review their lease agreements and current footnotes to determine the impact of this change before implementation. The pandemic has led many companies to negotiate changes in their lease terms or delayed rent payments until an extended lease end term. These lease modifications may cause additional lease liabilities and changes in rent expense. Free rent, whether COVID-related or stated in the lease, will be amortized over the course of the entire lease, again changing the annual rent expense for many companies. 

Click here to download a leases case study.

SALES TAX & NEXUS ISSUES

The transport of people and products often has varying considerations when it comes to state sales tax implications. Each law has various factors to be considered to determine nexus. Sales tax is assessed on some items, but not others. This blog post covers some of the more typical items in general commerce involving the transportation industry.

Click to read: Sales Tax Implications for the Transportation Industry

HOW DOES YOUR TRANSPORTATION COMPANY STACK UP?

Click to download the Transportation Industry Benchmarking Report.

Note: Interested in learning benchmarks and key performance indicators for your specific industry? Reach out to a Smith Schafer professional. We work with over 110 Minnesota transportation entities and have access to industry reports.

quote icon

Why Clients Choose Us

“We have worked with Smith Schafer for over 45 years. They have been great to work with, from wonderful administrative support, tax staff, and CPAs. They have supported us for years with our financials and mergers/acquisitions. Always there to help!”

 - Washburn McReavy Funeral Chapels

“Our service is always exceptional and never have to second guess the answers.”

 - EnergyPrint, Inc.

“Smith Schafer has provided second to none service and value to my business and personal accounts for over 30 years. Their expertise and knowledge are unmatched by any other accounting firm I have encountered over all these years.”

“The relationship we have built over the years with the staff at Smith Schafer & Associates is one that can never be replaced. They are quick with helping us figure anything out, always willing to pick up the phone and walk us through any problem we are having. Also they are just all so friendly and kind!”

“I have worked with Jason Boynton for several years. He has consistently provided exceptional service and advice always delivered in a timely, pleasant manner.”

“Smith Schafer always makes everything go smoothly. They were recommended to us by our community bank. We have been using their services for many years for our small business and personal taxes. We always feel well taken care of and that we are receiving the best advice, direction, information and tax preparation."

- The Dog Perk Corporation

“Smith Schafer always provides great information for our business. They are thorough with our accounting and financial planning. We have leaned heavily on them with an interpretation of the PPP Loan and COVID-19 planning. They have been instrumental in our success and are always very knowledgeable and quick to respond to any of our questions."

“Smith Schafer has provided second to none service and value to my business and personal accounts for over 30 years. Their expertise and knowledge are unmatched by any other accounting firm I have encountered over all these years."

“The relationship we have built over the years with the staff at Smith Schafer is one that can never be replaced. They are quick with helping us figure anything out, always willing to pick up the phone and walk us through any problem we are having. Also they are just all so friendly and kind!"

“We love our CPA team at Smith Schafer. They have helped us navigate many personal and business decisions."

“Smith Schafer is very dedicated to their clients and always has their best interests in mind. They are very knowledgeable and thinking ahead to what the clients may be needing in the future. We would highly recommend Smith Schafer to our family and friends."

"Always fast, great service and questions answered. Love the people I work with at Smith Schafer. We've been there so long, it's like working with family."

- MotoProz, Inc.

"Smith Schafer is always responsive and in the know about what is important for me and my business. The team is responsive and professional with all my interactions. Very customer-focused."

- Custom Communication

"The people at Smith Schafer always take great care of me. They are so knowledgeable and provide great advice and support."

- Sound and Media Solutions, Inc.