Teach me about 1099 and lease purchase

You have to find an old long time Owner op and pick his brain in person.
Ask him knowing what he knows now. If he could do it over. What and how would he do it?
I could talk to you for hours, days, weeks. Telling you all the things I would do differently.
Such as PAY YOUR QUARTLIES!!!!!
Set up 2 accounts for business alone.
Put $150-200 a week EVERY WEEK WORK OR NOT into it. That money is for taxes and taxes only. PAY YOUR QUARTLIES. You do not want to owe the irs!!!!!
Put at least. 10-.12 cents a mile (for every odometer mile into it weekly. That money is for truck repair and replace only

Dont mix your money and truck money.
Ok I'm going to stop there. Because over the past 30+ years. I have made every mistake one could make. So I could talk for months.

 

As far as the truck being the years you said you have a choice of, look at the mileage, look at the terms, look at the maintenance records (almost guaranteed they probably don't have any of these), look at the payments, look at any warranty that is included with the truck. When looking at the warranty, look at the deductibles you may have to pay if the warranty is one of those bs "service contracts" like NTP. NTP "warranties" in my opinion are borderline usurious. Volvos (newer ones) seem to have the best MPG I have seen in my driving experience. I have a 2013 Volvo that does okay on fuel. It would be better if I kept my foot out of it, though. You likely wont have to worry about going too fast as the company will probably have that leased equipment neutered to 65mph.

As others have mentioned, LLC won't protect you. It might help you later on with getting credit in your business name, but you may still also have to provide your own personal social security number or financials for any business loans.

The tax part of it, I personally don't hold out much at all for taxes and don't pay any quarterly tax. I do have the IRS hanging out of my backside for about 10 grand, but most of it was from a lease purchase thing I did in 2015. If you go sole proprietorship, even with an EIN from the IRS, you are a disregarded entity. Meaning your taxes and essentially everything you make is treated as income to you personally.

Almost nobody is going to suggest you should do the LP, but hey we all get why you're considering it. The bottom line with LP is you WILL pay far more than the truck is worth over the term of the lease and good chance you wont ever even actually own the truck.What you will be paying for the truck per week some of us aren't paying for trucks per month. Its not absolutely impossible every single place to make it as an LP, there are some that do and do well. Maintenance wise, if they don't already deduct the money for you to put in a maintenance account, do it yourself.

Write offs, all the expenses for the truck. The fuel, oil, coolant, truck payment, trailer rental or lease fees, insurance costs, registration costs, all maintenance and repair bills. Being 1099 you could claim the per diem that was taken away for company drivers back in 2016. I always just use the standard per diem rate, which you get 80% of as a deduction. You can deduct your cell phone bill, boots, uniforms, or clothes you wear only for work. Food you buy on the road.

I, like I am sure many of us do have and use a spreadsheet to keep track of our earnings and expenses. I probably spend more than others would on fuel simply because Pilot, Loves, TA, Petro all have the capability of fuel receipts being in their respective app on my phone and easily uploaded via onedrive to my fuel expense folder. Where I later put the receipt info (truck stop, date and dollar amount) in my spreadsheet and it calculates the running year to date expense for my fuel. Plus, all the fuel receipts are right there too should I need them if I get audited. I do fuel at some stops now and then where I have a tape receipt. I would recommend using acrobat to take a picture of those receipts and convert it to a pdf file. Or any other application you may have that can convert your picture of the receipt to a pdf file.

Ask if there is a way for the company to provide you an application or something to show you what the actual fuel price is with your company provided fuel card discounts already applied. Some companies have the capability and some don't. If they say they don't have one, suggest Fuelbook. It is a great app, it does cost the company some money, but it will show the actual price you pay using the provided card when they set it up right that you will pay for fuel when you use that fuel card.

When it comes to the contract you sign, make sure you look over everything from what you are being paid to the FSC and how much of it they pay. If you have the ability to do so, have an attorney look it over. Being that you are in the situation you are in I imagine you will probably not do that and just take what you can get. An attorney can help you recover anything the company ultimately doesn't hold their end of the bargain on. I suggest screenshot any recruitment ad that led you to talking to that employer or company and saving any and all emails. They may come in handy at a later time. Smart thing to do any time there is a contract involved.

That's about all I can think of at this moment. Full disclosure, I have only had my own truck since August of 2022. Spent a pretty penny on repairs so far but nothing I couldn't handle. One other important thing, is see if they provide you the rate confirmations for every load you haul, if you are going to be paid percentage on the lease purchase gig. Even if they don't if or when you need to resort to "extremes" the law requires them to provide you with rated freight documents at your request. Don't take that to mean they're going to be warm and cuddly and not feeling some kind of way though if or when you exercise that right. Whether you openly say it or not, it is going to LOOK like, because IT IS, that you don't trust them.

 

Wow. Just....wow.

To All who have replied on this Forum thread -- this has been an extremely good read -- and is also a wonderful example of just how fantastic this Forum really is.

-- Lual

 

Why are trucking companies so gun ho to do a lease purchase driving job with a SAP driver, but can't/won't hire as a w2 driver? Insurance? H

 

Because the profit margin is so good with fleece purchase deals, that they cant lose.
You are taking all the risk while they just make money

 

Because they know the SAP driver is probably going to work for whatever peanut wages they want to pay, run however he's told to run...legal or not, and the SAP driver will stay and take the abuse because he usually has no other choice.
Trucking companies are motivated by profit. Nothing they do is out of a kind nature or the goodness of their heart. Money, okay?

I'm sorry, that's harsh and I know it is. But it's not uncommon.