Serious question to any and all owner operators.... please

It's actually.....

In addition to that...

Do not get your base plate from the company you lease to. If things go south, you are going to suddenly be without and unable to go any place should you leave the carrier.

Same with a trailer. If you can swing it, use your own. Nothing sucks more than having no way to haul freight.

Fuel cards are the same thing. It's holding you to a company. There are also TWO types of rebates. The ones that give you a pump discount and in the case of TCH and FleetOne, a check that shows up a month later. I always saw the pump rebates. It wasn't until I got my own personal FleetOne card that I started to see the rebate check a month AFTER I used the fuel card. And it is not a small check if ALL the fuel is purchased on my FleetOne card.

 

1st, A truck is an engine, a transmission on wheels. The cab is just the thing that keeps the wind and rain off of you. Don't spend a lot of money on bells and whistles. You can find low mileage (less than 300,000 miles) trucks on truckpaper.com for less than $35,000 if your not picky about it not being a Peterbuilt. A low mileage Detroit 12.7 will run just as good in a $30,000 International as it will in a $50,000 Pete. Smart money says buy the harvester. Some people may argue resale value. Well ok, but are you a truck dealer or a driver? You're really not going to make back the $20,000 on trade-in. Also, if the payments on your FIRST truck is for the $50,000 Pete vs. a $30,000 Int'l, that might be the difference b/w making it and not.

2nd, I recommend setting up a S-Corp. You get the corporate veil, plus a gang load of benefits on income and taxes. If you're going sole proprietor, good luck. I went that route and almost lost everything. You can set up a S-Corp your self, or pay a lawyer thousands to do it for you. A good CPA can help you do it for a grand or less, but I recommend doing it yourself. $$$$

3rd, establish a business line of credit of at least $10,000. (for emergencies)

4th, after you have your truck, I recommend at least a minimum of $5,000 of start-up cash in your account.

5th, Pay your self beans for at least 6 months and save at least 20% of your revenue until you have saved at least another $10,000 cash plus the $5,000 you started with. Once you have saved that much you will have learned what it costs you to operate and then you will be able to know what you can pay yourself. The nice thing about an s-corp is you can pay yourself a w-2 wage that is subject to social security tax (15% since you are paying all of it) and the balance of your income can be a distribution (dividend) which is not subject to social security tax. Having $20,000 in the bank may look like lottery winnings. It's not. There are a lot of people you will need to pay most of that to before the year is over. Including uncle Sam.

6th, Never forget to pay uncle sam.

7th, I like Intuit online payroll. It's easy to use and it keeps your payroll taxes straight. It costs about $40/month. It will pay and file your Federal 941/944 and 940 taxes on your w-2 income by the push of a button. It will also file and pay your state taxes on w-2 income, for you and any employees you might have. Your distribution income is not handled in Intuit Online Payroll. After your first year of business the Feds & your state will require you to pay quarterly estimated taxes on the distribution.

8th, now that you know what fuel, tires, 2290, IFTA, Taxes, Maintenance cost, you will be able to know how much you can reasonably pay yourself. When you set up your budget, you'll have fixed costs like your truck payment, insurance, 2290 and your personal home expenses like you mortgage or rent payment. These bills are the same every month and are due even when you don't work. These fixed costs are why you have to - stay busy, and you need to save a lot of money incase you can't work. The house, truck and car payments still have to made even if you're sick or take a vacation. You will also have variable costs fuel and maintenance. If you don't drive you won't need to buy fuel or perform maintenance. I budget these by the mile. fuel costs about 50-60 cent/mile, tires and maintenance about 15 cents/mile. When I first started I budgeted every penny. I saved $11/week for the annual 2290 / $550. I saved money every week for my truck payment. $660/4.3= $153.49/ week, my home mortgage, my car payment etc... I budgeted my fuel and maintenance costs every week by the miles I ran. Some weeks I didn't have enough to meet my weekly budget. But I saved back from the good weeks to insure that I always had the money to pay my bills. As I slowly built my savings, and learned my business, I knew I needed to save $1100/week to fund my savings and pay my bills. So anything over $1100/ week was profit IF I had $10,000 in my savings.

9th, you are your own businessman. Health benefits, vacations and retirement are now all on you. Intuit Online Payroll will help you fund a Simple IRA for S-Corp owners and employees. (you are an employee of the S-Corp that you own). If your not getting health insurance through you spouse, you can get a personal policy from an insurance agent. Personal policies are cheaper than group plans. You can also customize a personal plan to match your needs. If everyone in your family is healthy you can get by ok with just a major medical policy. If you or your dependent/s have a pre-existing high dollar medical issues, premiums may be out of reach and becoming an owner operator may not be in the cards for you. Perhaps your spouse can get a job, any job that provides health benefits.

If you make a budget and stick to it, being your own boss can be rewarding. There is a lot of money out there for the smart O/O who can stick to a budget. Vacations can be fantastic - if you save for them. NEVER take operating money for personal use.

10th, I'd give it a year to learn your business. Pay your self beans and save save save for the first year. You'll see a healthy balance begin to grow in your checking account. You will be tempted to spend some or all of it. This decision can make or break you. Don't eat the apple. After your first year of taxes and insurance an other bills then you will know how much is really profit to you. If you are smart and patient, there will be a lot. Always try to maintain at least a $15,000 balance in savings for major repairs. If you drop below $15,000 - then it's back to beans and rice until you build that back up. I have seen a lot of guys go out and buy big new pick-ups and boats and bikes etc... thats all ok until you can't work one week and those payments still need to be made. You can make a lot of money, but the key to success is to be responsible with it.

This is the advise I always give after 16 years as an owner operator. I've made some big mistakes with a lot of zeros $00000. Making a budget and living within it's boundary is key. Can you be an owner/operator and retire a millionaire? Yes.

The latest lesson I have learned is that I will never keep a truck past 900,000 miles again. If you run 100,000 miles/year and will trade it at 900,000 then you'll need to buy a 400,000 mile truck if you finance it 5 years. As you build assest equity, you'll be able to trade into newer units each time you trade. This will reduce your maintenance costs and help you save for a newer truck next time around. Eventually you can own that brand new or slightly used dream truck and it won't hurt your budget. People will think you're rich. Well, the truth is that you will earn the same revenue every driver out there makes. The difference is how smart you are with your money. Savings and budget are key

Good luck.

 

I disagree with the "do not get a baseplate from your carrier" If you're hot headed and prone to making rash decisions then yes, that's good advice. Quitting a carrier is something best done methodically and on terms where they'd be happy to have you back.

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I have leased to 2 carriers that paid for the base plate. I quit one in GA and they let me keep the tag a few days to get home to NC ( I stopped on the way home for some repair work). I mailed their tag / permits back to them . The other company I quit , too. They are 4 miles from my house. Tag? I don't need no stinkin' tag to go 4 miles. I have never quit on bad terms. There are plenty of people using the companys' tag. Some companies require you use their tag. And if they're paying for it , i'm not gonna argue.

 

When I was a company driver, the owner of the owner of the company paid for the base plate of his owner/operators. Well, one year on Christmas he expected his o/o's to work. They refused. The owner came in on Christmas day and removed his plates from every o/op's truck on the lot. I remembered that when I bought my first truck and leased on to his company. He said he would provide the plate. I said no, thank you, I'll get my own. I quit after a year and was free to go anywhere I wanted. The company I am now leased to provides a plate but I would have to pay for it. No, thank you. If I leave they want their plate back. It will go on the bottom of the pile and I will not be reimbursed until all of the other plate before me is used. Then I will be given a prorated reimbursement from the time the plate goes back into service not when I quit.

Every company is different. If you like the company and they will provide this benefit, go for it. Ask other o/ops to see if the company is fair.

 

havent heard good things about oo company deals they start messing around with your money

your best bet if you want to lease is to find an independent company who doesnt cap your mileage and you can move to other jobs

IMO

 

Theres a company down in lauderdale fl at the truck stop lrm leasing

i stop in there once in a while they have good selection of repos and new vehicles

you need a pretty good security deposit not sure what exactly to do

 

One thing to remember is that when you get your base plate from the carrier to whom you lease your truck, you will pay a premium for them to finance your base plate. They put up the money and charge you a fee and perhaps interest on the cost until it is paid in full. When you purchase the base plate yourself, you keep the plate if and when you decide to leave. When you lease to another carrier, you will need to do some paperwork with the state and that is about it. Not everyone can afford to lay out the cash for their base plate. I paid over $2,200 this year. It was about the same last year. Most will pay from about $1,500 to $2,500/year for their base plate.

 

This does not work for everyone because it can be very time consuming but a few years ago, I was considering to become an O/O. What I did was remained a company driver but for a year I simulated that the truck I was driving my own truck, i started with a bogus amount of money in a fictitious account as my operating capital. figured in fuel, Truck and trailer payments, Insurance, maintnenace, mileage, rate that I would have charged, Tolls, Scales, and so on. This was not within 100% accuracy as there had to be some estimates and guesstimates invoved such as taxes for example. At the end I really wasnt any better as an O/O that I am as a Company driver. It gave me a better understanding of what an O/O really does does behind closed door. It opened the door for me to reach out and talk to some O/O and pick their brain and get as much info as I could. I realized that maybe I need a couple more years before I made the switch. Right now I am making that transition.

Not saying everyone needs to do this but this is the route I took and I hope I learned enough from that year to enable me to not go hungry and have a home to come back to.

 

jcdm,
you sound like a very smart operator and very switched on.
I can't understand why the OP has not done some research on this forum and found the story of redhunter( I think that's his name but G man will know who it is since he was on that thread)
It should be compulsory reading showing just how difficult it was to get up and running and this was for a guy who obviously had done a lot of homework and had a business plan.
People like you and those two, are a refreshing change from so much of the unresearched b/s that underpins what a lot of guys are doing in this industry.