1099 vs. W-2?

A lot of posts about becoming an owner operator have indicated you should probably have a savings of at least $35,000. I don't think there are many people that would recommend a lease purchase as they're almost exclusively designed to take your money and leave you with nothing at the end. The problem with 1099 is that there aren't any company jobs that can legally pay 1099. It's a contractor classification that doesn't really apply if you don't own the equipment already. 1099 frees the employer from having to pay a lot of money for unemployment insurance, they're half of the federal taxes, as well as you having zero protections.

 

How much capital do you have going in?

 

If you've never done long haul before I'd recommend you do it as a company driver for a year or two before you try to buy your own. It's not what a lot of folks think it is, and it certainly isn't for everyone - even those who like doing regional or local often can't or won't adapt to long haul.

Stay as far as you can from any lease-purchase where the same company/person(s) decide how much work you are given and also hold the lien on your truck. Just when you think you are getting ahead, they'll stop loading you to keep you under their thumb until they decide they want the truck back to "sell" to another victim.

 

If you decide to drive for a company before owning maybe @Chinatown can steer you towards a good company in CA.
Let him know your location.

 

A 1099 at 90¢ per mile is effectively 60¢ per mile as an employee. Go employee.

 

1099 pay fails to reflect the 25% of your revenue you will need to pay in taxes. If you agree to work as a 1099 driver you will need to pay state and Federal income taxes. You will need to pay Self-employment taxes (equal to twice the Social Security tax as paid to a W-2 employee) plus Worker's Compensation. 1099 also doesn't offer any health insurance. MANY 1099 drivers, new to the program, will spend every penny they receive during the year and only notice next April when they begin doing their 1040 income tax return that they owe THOUSANDS to the IRS. MOST trucking companies that pay via 1099 are misusing the IRS rules to avoid paying taxes. It's is a only a matter of time before the IRS discovers this and comes to collect taxes from the company and "employees".

 

Right now trucks and trailers are at all-time high prices, while rates to move freight are declining. It's a particularly bad time to volunteer to pay truck expenses. Even if you have all the cash to buy a brand new truck from the factory, you can expect to wait over a year for it to be built.