Costs involved in being an O/O?

Depends on whether you lease your truck to a carrier or run under your own authority. I'll assume for the sake of discussion that you want to buy a truck and lease it to a carrier.

You'll have to have the following types of insurance:

Collision
Cargo Liability
Non-Trucking Use (commonly called Bobtail insurance)
Workers' Compensation

The following insurance types are optional, but highly recommended (some may be mandatory, depending on your carrier):

Short-term disability
Long-term disability
Life insurance
Health/Dental/Vision

You'll also have:

Federal Heavy Vehicle Use Tax (See IRS Form 2290)
IFTA (fuel taxes - paid at the pump, but reported quarterly when your tax money is divided amongst the states in which you drive, according to the different state rates and number of miles you drove in each state). Most carriers will compute and report your IFTA for you.
Plates/Permits (if your carrier doesn't provide them - most carriers will pay for them for every year *after* the first year you're leased to them).

If your carrier uses Qualcomm, you'll have to rent a unit from your carrier and insure it. As an example, my Qualcomm rental is $30/month, plus $10/month to insure it.

Maintenance! Your 2nd biggest expense after fuel (or 3rd biggest after fuel and truck payment). I budget about $0.10/mile for maintenance costs on my 2006 Freightliner Century ($0.08 of this is required by my finance company to be held in escrow - that is so it'll be there in case of major malfunction. I can withdraw from it for any bona fide repair expense). This is to pay for everything from turn signal bulbs to engine overhauls. Tires, turbochargers, and tie rod ends. Bearings, bulbs, and belts. It is (almost) impossible to have too much money set aside for unanticipated repairs. Things break. Things wear out. You *must* be prepared for this eventuality, or you will not be in business beyond your first major breakdown.

Accounting costs. I *HIGHLY* recommend a good accountant for *ALL* owner-operators. This accountant would ideally specialize in handling trucking businesses. Even better would be a CPA who has extensive experience as both an O/O and as an accountant with a motor carrier prior to striking out on his own and starting up an accounting business. A good accountant is more than worth the expense.

Tractor supplies - Gloves, protective clothing, CB radios and antennae, bedding, 12-volt cooler, small appliances for use in the truck, all this stuff is business expenses, so it's tax deductible.

DOT Physicals, drug testing, and various other compliance stuff is typically handled by the carrier you lease to. That is part of why they don't pay the O/O all the revenue from a given load. The carrier brings quite a bit of value to the table with these things, never mind the sales work to book the freight in the first place.

I'm sure I just covered the tip of the iceberg here, but hopefully others can step up and pick up where I left off.

 

Most single unit O/O will have secure parking, probably at their home. They will have tools and lube equipment such as a hand grease gun and gear oil pump. They will have a battery charger, air compressor and pressure washer. Basically, an O/O can not afford to hire others to do what he can do himself.

 

Yeah, there's the parking thing, I hadn't thought of that. And the tools. I've bought them as I've needed them. Granted, a chassis lube at T/A or Petro is pretty cheap, and I'd rather pay somebody that small amount than do my own chassis lubes and maybe miss a couple of vital fittings...

But definitely carry a spare fuel filter and a fuel filter wrench. And a ratchet/socket set. And some combination wrenches. And a screwdriver set. And a test light. And a cheap multimeter. And vise grips. And various types of pliers. And some hole-strip stuff, a few bolts with nuts and washers, and some coat hanger wire or baling wire. And plenty of duct tape, electrical tape, and a few butt-splice connectors and a crimping tool with strippers and a wire cutter. And a good pocket knife - it can save your butt more than you know. Extra gladhand seals.

I fit all that into one toolbox, small enough to fit in the doggie door under the bunk.

I do pay for truck washes though - there are outdoor water use restrictions where I live, thanks to a multi-year drought, so I can't wash my truck in my yard.

 

If i can...can I ask where you guys are leased onto? (redbeard and heyns57) I'm about to start with Universal Am Can. I would like to know if they are a good company as well. Thanks.

K8cpa. Redbeard and heyns57 both pretty much covered it. Are you planning on leasing a truck from a company? (I would strongly suggest that you don't) Are you planning on paying cash? Financing? Using a friend's truck? Choosing how you will get the truck is the first step in the process. Getting license, insurance, your 2290 paid and your EIN number, DOT inspection and any repairs that need to be done should be next.

The easiest way to get started becoming an O/O is to call a few companies and get an idea of the cost of deductions. I was unpleasantly surprised at how many deductions I was charged for with the first company I leased onto. Even though I had a signed lease they charged whatever, whenever they wanted for deductions. Needless to say I didn't stay with that company long.

It's best to get a truck, pay cash for it, get your own plates, your own insurances (truck and personal) and then find a good company to sign a lease with. Starting out this might be too much though.

Just a word of advice. Most people don't factor in enough expenses when starting out as an O/O. They think as long as they can go get a truck then all will be fine. This type of mentality is why a lot of O/O fail. Becoming and being an O/O involves a lot of risk and a lot of expenses. Fuel being your biggest one. To be on the safe side you should EXPECT your average mpg to not be anymore than 5mpg. At 3000 miles per week 5mpg at $3 a gallon will cost you a minimum of $1800 per week. This will leave you with $1200 for the rest of your expenses and pay. In comparison 3000 miles per week as a company driver at .35 per mile will give you a gross of $1050 before taxes and insurance.

It's not always fun, it's definitely not easy, but being a successful O/O can be achieved.

 

I was leased to Key Line Freight (Grand Rapids, MI), Refrigerated Transport (Forest Park, GA), and RW Service System (Taylor, MI). Two of my employers competed with Central Transport and had derogatory things to say about them. All three of my employers are now defunct and the Centra companies continue to operate. If Universal Am Can is still a Centra company, I would stay away from them. However, my experience is out-of-date since I sold my tractor in 1982.

 

In all; after the purchase of a truck and expenses regarding any repairs that may need to be made: you should have at least 5k in the bank. For the float money you'll need to pay for fuel until you begin receiving settlements; your 2290/ $550 (for one truck, reg. from july to june each year); plates (if you run your own; which is advisable)/ $1600 or so; ifta ($10 for the sticker, but quarterlies can cost if you buy fuel where fuel taxes are cheap and you run where it's not); e-z pass deposit (depends on state); inspection (less than $100 generally); if you run in any state that has an additional hut requirement (ny, ky, etc) which will be a small fee to obtain/ plus usage fees. In addition: all the little important things mentioned by redbeard. I also keep a spare alternator; a spare maxi; complete set of spare belts as a minimum.
Some companies supply different things; which come with different compensation packages. I.e. mine supplies all trailers, straps, tarps at no cost. I pay for plates; hut permits; and ifta. They supply a qualcomm; which is deducted into an escrow acct. # $200 a week up to the $1800 they want to hold onto lest it be rendered unusable. I get a %. I could have them file all my fuel and road taxes; which would cost me 5% more off the top. I choose not to; as I feel it's a good skill to have for the future.
I feel it's worth it. If you have the available $ to buy a truck outright; I expect you'll feel the same way. Big payments are a death sentence to a first timer. Hope it works out for you!

 

I paid $19,000 cash for my 04 KW. Within the first 3 months I've paid around $4000 extra for plates, taxes and a few repairs. Hopefully I'm good to go for a while. Just fuel, oil and lube.

You will have to pay a lot more the first 3 to 4 months when you get started. It's like the other posters have said. It's a very smart move to have money saved up to keep a cushion between you and the unknown expenses that can pop up.

 

Bobtail covers your liability when no trailer is attached.

Non-trucking liability cover liability when hooked to a trailer but not under dispatch.

There IS a difference.