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darthanubis · Aug 23, 2016

redoctober83 said: ↑

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.
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Well done. I knew we understood one another last time.

Starboyjim · Aug 23, 2016

Holy cow, Red, are you taking a 34 reset? Nice post, and you're right, I did slip past a few details like other income. I have heard company drivers complain that the insurance offered is so weak, deductibles so high and quality so low, that they don't want to pay for it. I don't know, I have Medicare, which is really good. My wife is having a struggle for a decent paying job, and it's really hard to find a company willing to pay for Obamacare.

You're right, too, 25% is an inflated tax number. To get past16% (I seem to recall) your taxable income has to be above $70K. Or maybe $75K, I massage deductions to stay below the 34% line. That's a scary number.

Worst place to be? Just over the minimum for the next tax bracket. Thanks for your excellent post, Red. J

redoctober83 · Aug 23, 2016

Starboyjim said: ↑

Holy cow, Red, are you taking a 34 reset? Nice post, and you're right, I did slip past a few details like other income. I have heard company drivers complain that the insurance offered is so weak, deductibles so high and quality so low, that they don't want to pay for it. I don't know, I have Medicare, which is really good. My wife is having a struggle for a decent paying job, and it's really hard to find a company willing to pay for Obamacare.

You're right, too, 25% is an inflated tax number. To get past16% (I seem to recall) your taxable income has to be above $70K. Or maybe $75K, I massage deductions to stay below the 34% line. That's a scary number.

Worst place to be? Just over the minimum for the next tax bracket. Thanks for your excellent post, Red. J
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Thanks! No I'm not taking a 34. I'm just always running numbers through my head like that so it's pretty easy to give that info. Plus, I was sitting at a customer getting unloaded, I had time to kill.

haywire12 · Aug 24, 2016

Okay, will know shortly of what a full lease completion bonus is going to be. My total dispatch miles were about 325K for the 3 year lease.

So the lease completion bonus includes 1 day at Ramada or 3 days at campus inn and a free lease dinner at fire and ice.

darthanubis · Aug 24, 2016

haywire12 said: ↑

Okay, will know shortly of what a full lease completion bonus is going to be. My total dispatch miles were about 325K for the 3 year lease.

So the lease completion bonus includes 1 day at Ramada or 3 days at campus inn and a free lease dinner at fire and ice.
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Campus Inn, I'd pay out of pocket and stay across the street from Walmart in the new remodeled hotel there. They need to do something about the Inn. The part where the students stay isn't bad, our part is a dive.

Chucktshoes · Aug 24, 2016

darthanubis said: ↑

Campus Inn, I'd pay out of pocket and stay across the street from Walmart in the new remodeled hotel there. They need to do something about the Inn. The part where the students stay isn't bad, our part is a dive.
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I don't even bother with the Campus Inn anymore. I just automatically go grab a room at the Ramada. It's a much shorter distance to stumble from Fire & Ice.

haywire12 · Aug 25, 2016

haywire12 said: ↑

Okay, will know shortly of what a full lease completion bonus is going to be. My total dispatch miles were about 325K for the 3 year lease.

So the lease completion bonus includes 1 day at Ramada or 3 days at campus inn and a free lease dinner at fire and ice.
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Well got my lease completion bonus numbers today. For 325,536 dispatch miles I got 13,263. which comes out to .04 CPM. But when I factor in the excess tire fund (1535.73) and emergency funds (8727.44), 75 dollars a week for 3 years. Now comes out to $23,525.93 or .07 CPM

A little side note here is i would have been lower but I switched contracts halfway when I created my LLC so 191,372 was the old contract rate and 134,164 was the newer contract rate. So If i stayed at the old contract in 2013, (.0325) it would have been 10,579.92. The 2014 to now (.0525) contract would have been 17,090.64 Just a little information for anyone on the newer contracts.

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