Based on 2500mi/wk, the cost of all expenses is ~$1.50 per mile, right?

I sorta agree with this but you can get a pretty good idea what PM rate you need to hit to break even

I do the math on a per year
Take your total expenses for the year and divide it into the miles you can and expect to drive without running like a madman

If you use say 120k then take all expenses and divide it with that number

I figure a truck and trailer payment whether I have one or not, maintenance, repairs , insurance etc and that gives you a minimum you’ll need before you get paid

So say you figure monthly
Truck $2500
Trailer $1200
Insurance $800
Maintenance $1000
Fuel 6mpg @$5 gal $8300
And whatever else you have
That’s $1.38 with these numbers

Those numbers will change based on miles and repair needy gear and the actual miles you can or want to run
Any miles over that 120k are total profit and any expenses lower than that go into the bank

 

Even if you’re a sole prop it’s probably a good idea to figure on having some money left over to live and pay your bills with, unless all of your bills are covered by your spouse.

 

This is price fixing. Y'all stop talking about rates right now! There's no way you can share rates, some old timer told me that. Don't EVER discuss rates. Are you a broker? Is this a scam? I just want you to fail and go out of business so I have more loads to calculate my rates.

 

A solo o/o as a S Corp pays himself in two ways:
1. As wages
2. As owner's draws - dividend disbursement.
The idea of (1) is to pay just enough so that you satisfy the IRS requirement of a reasonable salary.
The (2) is to make up for what the (1) might not be enough.

Why do this?
Paying by wages invokes more taxes than dividends do.

Dividends should be understood as what's left over after wages - it is the net business profit, and not only what is withdrawn from business account. Whatever dividens are withdrawn or staying on business account they are taxed the same.
Sometimes (2) might be larger than (1) or none and sometimes (1) might change if there is less work.
In practical terms, it means that it is in a solo owner operator's interests to minimize the wages - while still making sure they're reasonable - and be more generous with dividend disbursement.

 

you want to give your time away for free go right ahead, even as a sole prop I calculate the expense

 

Whether money that your business generates stays in your business account or whether you draw that money for yourself as wages, it does not change your wealth (except for invoked payroll taxes)
Only from a tax law point of you, you as a solo owner operator business and you as a person are two distinct entities.

 

You’re missing the point. If he figures his cost at $1.45 or whatever and views wages as a tax scheme then if he runs around all year for $1.45 a mile because that covers his costs then he has exactly zero to live on, regardless of his tax strategy. If he figures his costs at $1.85 instead then he can probably cover his bills with the 40 cents.

 

And NOT including it in your expenses for your $/mile cost will lead to blindsiding yourself into not paying yourself. And worse yet, not assuming it is an expense means you WILL owe taxes youve not accounted for.

Billy has expenses of 1.5$/mile, billy doesnt include his pay, billy guesses and gets 2.5 a loaded mile rate. He gets 7.5 mpg and fuel averages 5$/gal for his 48 weeks of 2500 miles


Why is billy broke and owes 12,000 he doesnt have at tax time?


240,000 gross (2.5 a LOADED mile is only 2000 milea a week, you do have deadhead and 20% is a reasonable estimate)
180,000 expenses, remember 1.5 a mile is expenses, but those 500 unloaded miles still cost
80,000 fuel
100,000 for truck payment, insurance, etc etc

Leaves billy 60,000 in pay, but he owes taxes at roughly 20%, 12,000

Sadly billy likes to eat, his wife wants to eat, and he has a mortgage and car payment, occasional shopping, elpreexisting debt, phone, internet gas and electric, This costs billy 5000 a month. But he didnt pay taxes yet, so he owes 12000 and has no way to pay it. He should figure his pay at 60,000 as an expense of 50 cpm, but ALSO his taxes at 10 cpm, this gives him an ALL miles 2.10 a mile, so 2.50 a loaded mile works right? it accounts for deadhead %, yes but no, billys in the same spot,

Now 2.5 ALL miles is double his paycheck, double his taxes, but its actually affordable, but realistically, you can take expenses, INCLUDING driver pay and taxes, then add deadhead % back AGAIN (×1.2) to find what your REAL rate per mile needs to be.
In this case, his ACTUAL rate should be 3$/ loaded mile.

 

A side note:
Your thought on how it is unconstitutional is irrelevant for the sake of the discussion and should be addressed in the Political section of this site not to allure people with political rants to derail this thread that otherwise might be useful for beginners.

I am a corporation, not LLC. For the purposes of tax-paying efficiency, I elected to be S-Corporation. Yes, in order to enable the gimmick/device, if that's the right way to put it. However, I did not see any tax advantages of electing to be a corporation versus an LLC.

Do you have any reasons to see LLC as a better choice, for tax purposes mind you, than a corporation, especially at the solo owner-operator's level?