Page 48 - Volume 15 Number 7

NATIONAL BUSINESS AVIATION ASSOCIATION • focusThe single-person flight department confronts a whole set of challenges outside the cockpit, as many readers of Twin & Turbine know. Owner-operators are responsible for managing all the maintenance on the aircraft, their own scheduling, establishing relationships with vendors, and often keeping up with all the paperwork.Regulatory, financial and safety demands require a host of records: pilot logbooks, flight records, tax returns, passenger manifests, insur- ance documentation, and maintenance records.NBAA looked into the challenges the owner- operator faces and provides some guidelines to help efficiently manage paperwork requirements.“If you’re using your aircraft to support your business, you have the same recordkeeping requirements as a corporate flight department,” said Doug Stewart, president of AircraftLogs, whose company provides an online record-keep- ing solution for aircraft operators. “The biggest challenge for an owner-operator is the demand on their time. They have to do all the jobs of the flight department themselves.”Time CrunchIt can be tempting to skimp on the time need- ed for comprehensive recordkeeping, since the top priority is to fly the airplane safely, but the costs of incomplete or inaccurate records can be significant.“Poor recordkeeping can certainly result in overpayment of taxes,” said Glenn Hediger, president of Aviation Financial Consulting, an accounting firm specializing in business aviation.Aircraft used in a trade or business may be depreciated under Internal Revenue Service (IRS) rules, thereby providing significant tax ben- efits to the company. However, business aircraft are subject to deduction limitations when there is certain personal use, based on the travel pur- pose of every passenger aboard every flight. TheIRS provides four different methods – using seat- miles or seat-hours – to calculate the percentage of travel used to compute the disallowance.“If flight records are not available to do all of the different calculations,” said Hediger, “you may be stuck with the deduction limitation that is less favorable.”Additionally, the resale value of an aircraft can be affected by lack of good maintenance records.“When selling your aircraft, you’re compet- ing with other aircraft in the market of the same make and model,” said Stewart, “If you have incomplete maintenance logs, you’re going to the bottom of the list and you won’t get as much [val- ue for your aircraft] as the others.”Staying OrganizedBarfield speaks not just as an aviation insur- ance broker, but also as a light business aircraft operator himself. Hope Aviation is a company of 12 people, four of whom are owners and pilots of a Cessna 340 and a Cessna 182. They’ve found that integrating their recordkeeping processes into their existing business processes is the most efficient approach for their operation.“There are a lot of [software] programs out there to help you, but you have to find the tool that’s right for your operation,” said Barfield. “That being said, you just can’t do this alone, and you need to stay plugged into the aviation community.”Hediger agrees that owner-operators can man- age their aircraft recordkeeping with many of the systems they’re already using, if they have pro- cesses in place to input the right data.“For example,” said Hediger, “I’ve found that setting up separate accounts, or even a division within the software, for aircraft costs helps make annual tax compliance much more efficient.”If owner/operators don’t already have an ongo- ing recordkeeping process in place, their accoun- tant can help them set one up. mManaging the PaperworkSuggestions for Owner-Operators46 • TWIN & TURBINE JULY 2011