Registering your equipment to a separate entity that you own

It still all comes back to you the owner. Either way you own the equipment and are liable for it.

 

The impractical part regarding shielding from liability is if you are still the driver then you still have liability for your negligent actions in a crash or other event. Same if you directly supervise your employees or run the day to day operations, there is always a level of liability for negligence actions that pierces the corporate veil for active owners.

The only way to truly shield your petsonal assets is to not active manage the company you own. Hands off is the best shield. Even Directors and Officers (D&O) insurance won't shield your personal assets from direct negligence on your part.

 

serious question here, what are the benefits of this? just seems like it creates alot more paperwork ?

 

the way i understand it, is you still own the company. whether you have 16 companies all managing different parts of the business or 1 company that does everything. your name is on all of them. so it all comes back to you at the end of the day.

 

I know exactly what you are saying and it does not work, the assets you own can’t vanish into the ether as if sone mysterious stranger is going to be liable for your actions as an owner or owner operator, this has been in court many times and people have lost trying to do it.

as an owner operator, your personal assets is part of the package, no matter what the business entity is. The exception is retirement assets.

any lawyer who says otherwise, ask them if they ever defended a person who is negligent in a case in this industry and won, if they haven’t, they need to look into the cases that already happened.

 

Say your overall taxable income is $500,000, taxed at an effective 20%.

If you create a holding company for the equipment you cab "pay" them $100,000, reducing your taxable income to $400k and $100k. With graduated tax rates, that will reduce your effective tax rate by 1-2%.

Now create a "logistics coordinator " and "pay" them another $100k. And a maintenance company that gets $50k, and so on and so forth.

If you do it right you can avoid a significant amount of tax. It's like how the Harry Potter movies all "lost" money. It's all about how you structure the balance sheet. The cost (both time and money) of doing this isn't going to be worth it for small companies, but the bigger you get the more it pays off. Especially when dealing with HR laws. There are legal requirements that companies with 50 + employees must follow. If 5 of your employees work for the logistics company, another 2 for the maintenance and 1 for the equipment holding company you can skirt some of those employment laws.

 

That's only if the driver is the owner. Even then there are ways to shield assets from civil liability. My dad didn't "own" the house I grew up in. The family trust did. That way if he got sued and lost, the house couldn't be touched.

Even if it is a one truck operation, setting up multiple shells can shield assets- at least for a short period of time. If the holding company is the primary debt holder when assets are liquidated then at least some of the money will get "returned" to the owner. However the cost of creating this paper shield generally won't pay off in the long run. It's better just to increase your liability coverage.

 

Clearly it’s worth it for the companies that do it
It has to be to avoid alot of taxes
Everything companies do is to dodge taxes

 

NA.

 

I have been involved in (4) fatalities; all involving owner operators leased to a carrier.

The first three were all outside of NJ and two were completely not our fault.

In each case the leased drivers were represented by the carrier's insurance.

The 4th was with the carrier i'm retiring from.

The NJ State Police attrempted to suspend the individual's driving priveleges for 14 months with no charges filed against him.

FCMSA says convicted of a fatality loss of CDL for one year...

The insurance provided legal firm managed to obtain survelance video showing the drivers out of their trucks where they were not suposed to be and without wearing reflective clothing and one of the attournys acompanied him to the hearing in Trenton and squashed the suspension.

Unless you have really created a huge catistrophic loss, running on our own authority should work the same.

You only want insurance from a company with a AAA+ rating; you get what you pay for AND your future insurance cost is based on your 'experience mod' [a multi-year running average of all of your claims open,closed, and in reserve.

After a large pay-out you can expect cancellation and the next compay [your agent/broker should have 2 in his pocket] will be charging acording the the experience mod and you wll sigh and pay up saying 'at least I'm still in business'.

Now if you exceed the limits of the policy...that's when your assets are on the line.

This is the kind of things a good broker can explain and reccomend before your gibblets are heading for the gravy.

Supplemental coverage may not be all that much more. The first 750K or million will cost the most as it expects some losses to occur. So an additional million won't expect to be used frequently so the supplemental [usually a different provider] should be an affordable buffer.

Get on board with a trucking insurance broker and get the coverage you need to sleep thru the night.