This is exactly right. We have to get out operations efficient enough that we can survive and make a living wage on a buck fifty a mile freight cause no matter how good freight is today, it will always cycle back to those lousy rates in bad economies. Survive the lean years so you can thrive in the good years.
Caution Prospective Independent O/O! My Embarrassment.
Discussion in 'Ask An Owner Operator' started by TallJoe, Oct 20, 2017.
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Good for you @TallJoe !! I started in 2016 and understand. I was fine but it was close a few times. Last year was much better and the first quarter this year is even better.
I feel the same way. I’m running and operating like the worst quarter I had. Is going to be tough to go back to those poor rates when they come back around. But like you a mans got to do what a mans got to do. Difference this time around the truck will be in better shape, most of the debt will be gone or cash in the bank to clear it up and the war chest most of the way full this time. In the meantime I’m working as hard as I can to keep working even though I want to take it easy. I’ll save that up for when rates are in the crapper again.
Thanks for the update!TallJoe and Scooter Jones Thank this. -
$80,000 * .9235 = $73,880 * .153 = $11,304 (self employment tax)
$80,000 - $5,652 (1/2 self employment tax deduction) - $16,000 (20% qualified business income deduction) - $24,000 (married filing jointly standard deduction) = $34,348 (* .12 - $381) = $3,741 + $11,304 (SE tax) = $15,045
Substitute in a $12,000 standard deduction for a single filer gets you to $46,348 (*.22 - $4,061) + $11,304 = $17,450.
The tax will be reduced further by any health insurance, Health Savings Account and SEP IRA deductions.
Anyone thinking about electing to be an S Corporation for 2018 has to work the numbers to see if it will be worth it to pass up a full 20% qualified business income deduction for a pass through entity because of having to take a paycheck for a S Corporation. The salary income does not qualify for the 20% deduction.Last edited: Apr 1, 2018
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Last edited: Apr 1, 2018
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Back to my numbers....
There is a certain constant trend I noticed,...you get to keep about half of your gross Revenue per year. Say you gross $100 then about $50k is left in your wallet...if you want 100K you must generate 200K of gross. It also worked that way when I was leased on...
Edit: That's before IRS takes their cut...
Example: A trip from Chicago, IL to Winchester, VA for the rate of $2500 (dry van) translates into $1200-1400 at the end of the fiscal year, however initial trip profit seems much better...after fuel and tolls cost of $500 you might think you made 2000 for two days of work...not really.Last edited: Apr 1, 2018
Justrucking2, spyder7723 and SL3406 Thank this. -
Of course, the more you make, the higher % they take
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Another thing to take into consideration when you are a S-Corp is the pass through income that is not subject to self employment tax does not count as earnings when calculating your eligible social security income when you retire. If you are planning on having social security supplement your retirement income, this should influence your decision on whether to elect S-Corp status for an LLC entity.
Many unscrupulous accountants always recommend their clients to elect S-Corp status because then they can bill for two tax returns instead of one. An S-Corp tax return will always command a higher fee with these accountants because it is a separate entity.
I have many clients who are S-Corps, but skirting the self employment tax is not the main reason why they chose this type of entity.TallJoe Thanks this. -
I just think that I'm better off to have more available cash on hand now...it feels that I need it more now vs. in older age... 20 years from now.... which according to a truck driver's life span prediction, is not something to be so certain about.
Sep IRA is the way to go, it seems, if there is plenty of cash sitting around.stayinback Thanks this.
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