Fair Agreement for Contracted Driver question

I may not completely understand how you are setting this up but I think you need to first of all decide if he's your partner or he is your employee. I realize you've known him for a long time but he has to either be your partner or be your employee.

Even further than that is he your employee that's going to be running things and you will infrequently look in on things? Or are the two of you working together every moment of every day with this. Or is he the one that's going to do all the work and you're going to do all the money and then at some point he's going to move into management. Or is it his business that you are just fronting all the money and he's your partner but he makes a partner salary because he's doing all the work? Is he a partner as in he's a partner with his name on the LLC or is he an employee that you want him to feel like a partner? Who books the loads? Who does the billing? Who's going to do the maintenance?

I think that is the very first thing that you have to make perfectly clear and maybe you do have that figured out but I don't understand it from your post.

That will dictate more clearly how he gets paid.

And you are sure Intermodal is the way that you want to start?

 

With all that is said, I am going to give you some advice and take this very seriously.

first you and your wife need to sit down with a lawyer and craft a good solid contract if you want to keep this contractor idea going.

Do not include the driver in any discussion between you and a lawyer, he has no skin in the game seeing he is a driver and you have to get that through your head. Don’t even consider making him a partner.

Second you have to sit down with an accountant and go through the structure of the entity, I would not use an llc, because more likely than not the llc won’t do much outside of taxes. Think s or c Corp and leverage it into a fleet at the same time reducing your overall liabilities.

third is he is a driver, he may want to be 1099 but more likely that will be a huge liability for you if the relationship goes south which most of the time it does, remember no family or friends rule. You can’t force him to take work when he does not want to nor can you direct him on how to do the work, literally no force dispatch.

this isn’t the best time to start a company, we have a very unstable economy and a possible huge increases in fuel and changes to this industry that will effect all of us negatively. Beside that, we are looking at a housing bubble bursting maybe by the end of the year, with the inflated markets we are seeing (there are people outbidding each other for housing, one case I heard the guy selling the house got $100k more than he was asking for) and it ain’t going to last - trigger may be the fed increasing the lending rates. This will ripple through the economy like a tsunami.

 

right away we know your here to put the screws to drivers. The only advantage of 1099 is to you. Best advice, go away.

 

Why would the driver want to be 1099?

that’s going to come back and haunt you if you do it .

 

LLC setup as an S corp is what I would go with structure wise.

I wouldnt do 1099 but it seems you have already decided on that. If you go that route and with percentage then i wouldnt do more then 25%. Actually wouldnt do over 20% but thats not popular opinion around here. I doubt this arrangement with your friend will last more then 6 months anyway so be prepared to hire a driver on a w2 and do it the right way.

What area of the country are you in? What type of trucking are you planning on doing? OTR? Regional? Local? Trailer type? Id make #### sure he has no skin in the game in fact. You need to be able to part ways quickly and move on when things dont work out with him eventually.

I myself would never pay on percentage but thats just me. I pay 60 cents per mile with a $1500 weekly guaruntee but depending on what type of trucking your doing, that may not work. ie local

 

You could do something like $25/hr with no overtime after 40 hours and put him on w2. That would put him around 75k per year gross assuming 60 hours per week or so. Thats what I do with my local guy.

Have you thought about getting your own authority? Its gonna be rough getting a percentage of the loads, and then giving him a percentage of the percentage. FYI when I said 20% that was me talking about running on your own authority. You may need to do a higher percent due to the fact that your only getting a percent yourself.