Driving for an Owner Opperator and Taxes

Mike you are to be highly commended for starting out right off legal,I hope you hire a good experienced driver that knows the ropes and does everything right for you to help you expand. Its nice to know there are some folks like you doing it right and taking care of your driver. I wish you the best in your new endeavor.

 

Well thank you. I hope I'm not a pest with questions, but as I learn hopefully I can offer advice later on down the road.

 

Always help when I can,don't know as much as some do, but I will always give you my honest answers to any questions asked by any of you. Good luck once again.

 

Actually, you are incorrect. To be a "SUBCONTRACTOR" you MUST meet certain requirments (according to the IRS):

1. You MUST supply your own tools/equipment necessary to perform the job
2. You MUST be able to determine the hours you work
3. You MUST be able to determine what area you work
4. You MUST be able to determine HOW to do the work

So, if your employer supplies the tools and equipment necessary to do the work, if your employer determines the hours you work, if your employer determines WHERE and HOW you perform your job, you CAN'T BE a SUBCONTRACTOR.
Even IF you own your truck, you STILL could be considered an employee if your employer determines your hours, where and how you perform your job.

As an EMPLOYER, HE MUST take out payroll taxes and provide Workers Comp.

Sued an employer two years ago who claimed I was a "subcontractor" and currently sueing another. But, these claims are because employers failed to pay all monies owed and abide by State/Federal Labor Laws

 

NOT True, they cannot enforce an ILLEGAL Contract. Been There/Done That

Also NOT TRUE, Federal Labor Laws REQUIRE employers to provide WComp at State Minimums. He MAY have to pay out-of-pocket, but he has RECOURSE to go back on the employer to PAY COSTS, plus the employer MAY suffer civil penalties for violating laws.

 

I don't know where you are from,it doesn't mater. I know the laws in MY state which may be different from your state.

Sorry but they have been doing it for years. Very few owner operators provide Workman's Comp to their drivers unless they are leased to a company that forces the issue or the state law requires it.

You are assuming two things here. That the driver knows the law and the owner operator complies with the law.
The average Owner Operator cannot afford the expense of Workman's Comp. Here in ALA it's running around 16% of the gross payroll. I don't agree with the law and we have always covered our drivers and they were EMPLOYEES and treated as such according to law. However it's been a long time practice in the trucking industry to treat drivers as contractors and subcontractors and 1099 them.
The contract is legal and binding just like any other contract is as long as you meet the IRS guidelines for determining whether or not your driver is a contractor or sub contractor. Any driver that signs one and doesn't read or understand the implications of the contract is a fool.

Here in Alabama we don't have to provide Workman's Comp until we have 5 or more full time employees which is in FULL compliance with Federal Law.

Each state has different laws and state law supersedes Federal Law. Each state has it's OWN laws and every driver and owner operator should look into those laws BEFORE they step off in to any situation. The Feds just want the taxes and don't care WHO pays them.

Some shipper require that you have a Workman's Comp policy and some will take what is called here a Accidental Injury Policy in lieu of it.