Lease operator is working well for me so far

99% of the posts in here are negative, so I figured I should atleast give my experience as a lease operator.
I have been a lease operator since the middle of 2012 with a fairly well know trucking company. I also train student drivers for them as well and spend the majority of my time in the passenger seat. I drove for them as a company driver for about 3.5 years before leasing a truck from them.
My first lease truck was a 2007 FL Columbia with very low payments. However, it had high miles and no warranty so I turned it in for a 2013 International Prostar with a great warranty but a lemon of an engine with their MAXFORCE flop. And although I made more money than I did as a company driver/trainer, I turned it in early this year for a 2016 FL Cascadia. I have no intentions of trying to pay it off, as I have been doing well just turning them in when they no longer meet my desires. I drive about 125k miles per year and stay out on the road for anywhere from 30-60 days at a time, and then go home for about 10-14 days.
So bottom line.. Last year for the year of 2015, after payments,insurance,expenses such as fuel,maintenence etc... my taxable income was just over 86k. My best year as a company driver/trainer was just under 72k.
I know that I may be able to make more if I bought a truck outright, but I am intimidated by the risk and am perfectly content with the current situation I have.
Lease purchase may not be for exeryone, but I consider myself to be a success at it.

 

It's nice to see a success story. So what was your net take home after paying taxes for that 86k?

 

I actually have no idea what the net after taxes is. I pay my taxes every quarter (both state a federal) and they range from as low as around $3,000 to as high as nearly $7,000. I use a company called ATBS to help me with this. I am sure it is the same tax bracket as it would be if I made that same amount as a company driver. However, I do get to write off some good tax breaks that I did not as a company driver, for example... I just spent over $4,500 for a 48 x 35 foot cement slab for a shop building and am in the process of having the building built within the next few weeks, which will cost about $14,000. And because I am putting a 14 foot high door on it and can park my truck under it, I am able to deduct the entire $18,500 as a business expense, Although my truck will actually never be inside the shop building at all.

 

I have been debating on going o/o with my company I currently work with but I would have to find a company I can either purchase or lease from that will allow me to take the truck anywhere. I already know about Lone Mountain Leasing, but that is the only leasing place I have found so fart where you can take the truck anywhere. Leasing from a dealer is just way too expensive. Volvo is $2,900 per month + .12cpm.

I was able to see some of the spreadsheets of the o/o income and expenses for last year and their net wage after everything but taxes were anywhere between 55k and 90k depending on their work habits and repairs. I am currently keeping track of how much my company truck is costing to run so I can get some real numbers to compare.

Keep us updated on how things are going occasionally.

 

Good for you! You seem content doing what you're doing and that's all that matters!

 

Yeah. Different folks have different situations that work well for them. Good 'ol Americanism! My net has also been pretty good that in discussion with my accountant, i decided to form an LLC with a S Corp tax structure, place myself as a W-2 employee of my own company, and I have managed to save some serious tax liability. This year is working on being a very good one again, and I have saved several thousand in taxes with this business structure. I would take a very close look at it if one is netting over 50K a year.

With the sole proprietor thing, all of your net is subject to both income taxes and SECA (social security). Doing it my way, I pay myself $750 a week which also subject to income and SSI taxes, but what the company makes above the roughly $39K a year I pay myself as a W-2 employee (the average annual income of truckers in my state per the Dept of Labor) is passed on to me in the form of company income distribution, and is only subject to income taxes and NOT social security taxes. Based on the OP net he is seeing, subtract $40K a year in salary to himself, the balance between that and his Net would be about $46K. SSI taxes on that, if a sole proprietor, would be 15.3% or $7038 a year. I am not sure about anyone else, but I would much rather keep that money in my bank account than giving it to Uncle if I don't have to. LLC with an S Corp tax structure (cost me $150 to set it up) allows me to save that money.

A good article that discusses the pros and cons is here......

http://www.bizfilings.com/toolkit/news/tax-info/llc-plus-scorp-equal-best-of-both.aspx

 

Everyone has to pay taxes, company or independent contractor, so that number doesn't matter as much. The number you got to look at is 'after benefits'. What i mean by this is you fit to factor in the extra cost for health insurance and matching 401k for example. So say as a company driver you make 70k and as a lp guy you make 85k bit spend 12k to get comparable employee benefits then you really only made 3k more, not 15k more.

 

Well, one does have to understand that medical insurance costs are part of expenses, and taken into account in determining net for a business owner. My net last year also exceeded $80K, and that was after i paid for medical insurance for both the wife and I, and contributions to my health savings account. So your idea that employee benefits compare to what a owner is able to do is not the same. All my "benefits" are part of operating costs, which come off of gross revenues, and that leaves a net income for taxation. I essentially have all the employee benefits and I still net over $80K last year after paying for them.

This year is slightly different, since now I am a W-2 employee of my little one truck company now. I pay for all the employee payroll and "benefits" to me out of my company revenues. And even after those costs, and paying myself $750 a week in salary, my company net as of the middle of September for this year is over $50K. There is no way the average company driver can even come close to that. $39K in salary for the year, full benefits, and as of now, $50K in net income from the business. This is the ultimate definition of "employee owned". This is why I can pay myself $750 a week, even during the 3-4 weeks a year I typically take off and still make a very good company income. And the BCBS medical insurance with $5 million coverage thrown in along with company contributions to my health savings account.

It pays to have a business mindset when running a business, and the advise of a reputable CPA to guide you.

 

I've been a L/O and O/O with Schneider for a little over 3 years (I leased a used truck for 2 years and at the end of the lease was able to buy it outright). Frankly, I've never been happier in my life. It's not for everyone, and you need to be fairly disciplined, it works very, very well for me. What I think a lot of guys don't get, is that many times as a business owner you have to work harder than if you were an employee.

 

The main reason I got my authority in January, bought my own truck & trailer, was at it's core, a control issue.

I'm a control freak and don't like leaving my well being and or success in the hands of someone else. Someone else who may or may not have my best interest in my mind at a particular moment, for whatever reason.

I take care of everything now, from booking my own loads, scheduling, negotiating, invoicing, collecting, accounting, taxes, etc. Yes, it does require an extra level of discipline. However, the payoff for me is immeasurable, because I'm in control!

I tried leasing on and running under another companies authority, ultimately didn't like it either. I had to run their freight in their trailers even though the truck was in my name. Decided that wasn't my cup of tea.

Some guys like to do it that way because someone else handles everything for them and their is some comfort knowing the company has some contract rates that provide consistency in freight runs.

I get that, but it's still not for me...