3 Year completed

I think you need to read the thread again

 

I see that was to Aug so his yearly pace is 46,860.00. My bad. I truly wish him and every person out there the best when it comes to this leasing gig.

Be Safe Out There


Captain Dave

 

In my opinion haywire12 should be commended. He stuck with it the whole three years.

If haywire12 felt like he needed to make more money he could go anywhere he wanted with that stability.

 

You're correct as far as it goes, Redoctober83. But isn't a sole proprietor's personal income the net profit from his business income, aren't they the same thing?

I agree with your basic idea, though. I also think Western Flyer's point is perfect. I talk to people (in here counts as conversation as well as truck stop talk, right?) who say that driving for a company at $.42/mile, or less, earns the same net income as a owner/independent will earn. That's just crazy. And I absolutely believe they say that because they don't know the difference between gross and net, after taxes and expenses, annual income. Or perhaps they just love being told what to do, when to do it, and where to go with it. Personally, I'll never drive forced dispatch again, I make a much better annual net income than 99% of company drivers, and I get to drive my own truck. It makes great deductions for me, as well as those attractive weekly settlements.

Something else we don't hear much about, Western, is that when we spend money on our trucks, we get tax deductions - everybody knows that. But that stuff? That's our stuff! Our truck gets improved, our outfit gets improved, we keep that stuff after we've bought it and used it to reduce our tax amount. A bit better overall than purchasing consumer goods. I believe.

Like a fisherman can't tell the difference between a minnow and a whale.

 

Captain, that's about right. I'll give a little personal information, for comparison. I lease to a carrier, discounts on all expenses, especially insurances, fuel, tires, and plates. I have averaged 120K miles/year for the last 3 years. This year I'm taking care of a lot of things in my life here in New Mexico, and my miles are down a bit, maybe 110K this year. Even so, it's still August, and my income after expenses and before taxes is $77,980. My truck is paid off, I bought it from a Lonestar agency, which is really nice.

So, would I go for that lease program and get home more often? I might, if you caught me on one of those days. Pay on a truck for 3 years, pay the lease off, and have 2 more years to go paying the finance company? I don't think I could do that, even if the truck has a lot more spec than my '08 Columbia. I guess I like to keep it simple and keep as much of the earned income as possible. Anyway, we all have our 'druthers, and I hope Haywire makes it thru these last 2 years in good shape. Best to all, that's my motto.

 

He can when it gets to the boat....there's no easy answers out here.

Be Safe Out There


Captain Dave

 

@haywire12, don't you get a cash payment for finishing the Lease as well?

 

Yes he will. He's on his way to the terminal to get the payout actually.

 

A sole proprietor's personal income and the net profit from the business income are two different lines on the tax return. Your business income is going to go on a schedule C, where you show your revenue, expenses and deductions for your business before you carry it over to the 1040. Your personal income might include wages from another job, interest earned on investments like stocks, bonds, mutual funds, or even your basic savings account, as well as rental real estate income or social security benefits. All of that combines to be your personal income which would be different than your business net profit or loss.

Then of course health insurance isn't deducted from your business expenses, it's a personal deduction now as a separate line item on your personal 1040. That's why when you see most owner ops or lease ops stating net, they don't include health insurance or any other personal expense in that number. In the eyes of the law if you were a big corporation, that would be embezzlement and fraud We get away with it since we usually don't have other employees, lol.

I agree with you that a lot of drivers think that 42cpm will make them the same amount as a lease op, but most of the time they never really crunched the numbers. They are of the mind set that miles = $$$ and so they think as a lease op it's the same way. You need to run miles to make money. I don't know how many times I have sat at truck stop or at a terminal and explained to a new lease op that he shouldn't be focused on the miles, but focused on the total revenue.

So in that same line of thought the driver is thinking if I driver 3,000 a week at $1.50 (a number you see a lot of people use around here) I should make $4500 revenue. Take out $1500 for truck payment and fixed costs (I am being conservative on that number), because we suck at driving lets say we spent $1000 in fuel. That will leave us with $2,000 take home. As a company driver at 42cpm, my gross would be $1260 before benefits and taxes. Lets say benefits for this single person are $100 and taxes are $230 (I am assuming our driver here lives in a state with no income tax and knows how perdiem works).

In our example the company driver would take home after taxes and benefits $930, while the lease op after taxes at 25% (I think that's pretty high but lets play it conservative) is taking home $1500. The lease op would still need to pay for his own health insurance, which with obamacare will probably cost him $400 a month, so lets take another $100 off his weekly take home leaving him with $1400.

Looks like our lease op is doing $470/week more than the company guy or $22,560 a year more than the company driver (that's based off of 48 weeks of work, not 52).

So, to summarize the lease op looks like he is making $67,200 take home after taxes and benefits (just so you understand that is not net profit, net profit would be before taxes and benefits, this lease op's net profit before all of that is $96,000 over 48 weeks) while the company driver's take home is $44,640 after taxes and benefits (his gross, which would be the equivalent of a lease op's net profit would be $60,480).

So to confuse you even more for the lease op to make the exact same as the company driver the lease op would only need to drive 2100 a week at $1.50 a mile. That's 900 miles a week less than the company guy or 43,200 miles a year less than the company driver would have to drive just to make the same amount of money. Even crazier is that would equate to 14 weeks a year off for the lease op or just over a quarter of the year of not working.

So there is the long answer as to why owner op's and lease op's always give there numbers before taxes and benefits.