Some numbers for new O/O

Should be an S Corp 90% or more of the time for owner operators. When you start to employ other people, it's time to do something different.
Quick difference in an LLC and S Corp
LLC, lets say your net pay, after all deductions is 150,000. You pay federal income taxes and the Self Employment Tax (15%) on that 150,000.
S Corp- Lets say your net after all deductions is 150,000. You pay yourself a salary of 60,000 dollars. This means, you pay federal income taxes and the 15% self employment tax on ONLY that 60,000 dollars. On the 90,000 dollars, you pay federal income tax, but you don't pay the self employment tax of 15%.

So, lets say your net is 150,000. Based on saving 15% of 90,000 dollars, you save 13,500 dollars per year. You should have an accountant as an S Corp that costs 1500 per year. That's the going rate. 2,000 per year is to much. Get another accountant. On that 13,500 dollars, if you subtract the 1500 dollar per year accountant fee, you have 12,000 in your pocket. So, if after all of your expences, your Net pay is 150,000 for the year, the difference in being an LLC and an S Corp amounts to........12,000 dollars more per year in your pocket or to breaks it down further, 1,000 dollars per month. If you are an owner operator, you have to be on DRUGS if you are still an LLC for tax pay purposes. You are literally giving thousands of dollars away each year. You would be amazed how many O/O's are out there that have the mindset of, "I don't want to fool with accountants and all that crap, I just want to keep it simple and be an LLC." As crazy as it sounds, they are out there.

 

What are the downsides? Isn’t there more personal liability protection being an LLC vs an S corp? Either way I’m very interested.

 

You can be an LLC taxed as an S Corp. that’s what mine is anyway.

 

Agree. Same here. I should have been more specific. When you go to file your taxes, you want to be taxed as an S Corp. I am also an LLC, but obviously, for tax purposes, and S Corp. Sorry Midwest Trucker, I should have been more specific.

 

Thanks for the info

 

FYI. You can play all the games you want, but if it’s just you? An LLC won’t protect you and a corporation could be torn apart by a judge. Not saying it would happen. Bottom line is the only thing that can protect a single O/O is insurance.

And that’s straight from an attorney.

 

I agree. No question about it. I'm just saying that the corporation part is where you save major money, as in....thousands every year by being incorporated. Obviously though, you get in the right accident, and sh* can happen that ruins you, regardless of what you are.

 

I agree with that. That's good stuff. Some tips that will help new drivers. Strike it why the iron is hot!. Meaning, if you find a rate that is high in one area, the odds are it will be high in that area the next week. So, instead of being home every weekend, considered being home 4 days every 2 weekends. Something this simple can DRAMATICALLY effect your gross. For example, if you live in Georgia. In order to be home every weekend, you just limited yourself to no more than 1/2 of the United States. You just limited yourself to going no further west than Kansas and only the Northeast because you have to be home every weekend. What if you did 4 days off in a row every two weekends? See the difference? You can now make the trip to California or Washington from Atlanta, and score the the weekend rate for the big load on the way back to Atlanta or wherever in the Southeast. Something seemingly this simple could put Thousands of money in your pocket by the end of the year. Instead of making that 120 K, it may turn into 140 or 150 K. Or, make a compromise where you will be home every weekend for 2 weeks in a row, then you are gone for the next 2 weeks, and then take 4 days off. If you can just stay out for 2 weeks at a time ONE time per month, you are going to add money to your pocket in the long run. I guarantee you! It's also about quality time. My wife and I literally plan our time together down to the hour before I am home, from dinner to the beach to movies to theater to sporting games, etc, and it's incredibly valuable and works out, and after I have spent 4 days with full time with her, it feels like we have done a ton of stuff that we would likely normally do if I were home everyday.

Another tip for new drivers. Yes, use brokers for the first 6 months as that is the only way you will get loads anyway, but after that 6 months, start to look directly at the shippers and skip the brokers. By doing this, you add another 5% gross at least by years end. Another thing, factor your own shi#! Yes, Factor for the first year to build up a cash reserve for catastrophy, or do quick pay option, but once you have 50K stored away for catastrophy, STOP factoring for God's sake and you save another 3 and up to 5% gross. The biggest single factor outside of maintenance issues that really hurts truckers is the inability to have the option to go in 50 states. Think of it like a football play. Ever here the announcers get upset or question the play when the QB gets the snap on a pass and roles to one side of the field on a pass play? Sure, he may complete the pass or get a big completion, but that play is called, basically one half of the field is removed/not an option for the QB to throw to. Same kind of analogy with trucking. Try to do whatever you gain to not limit yourself to one half of the playing field when starting out. Have the entire "field" as an option to execute the play. I see this especially in the Southeast with my friends. The Southeast traditionally just simply doesn't have the rates like the rest of the country, especially the upper midwest, mountain west, west coast, and so many guys from the Southeast do the regional thing or the I-95 or I-77, I-85 corridor thing and many who have established lanes do well, but as a whole, if you could take all of them in one scoop, if they were to run more in the upper midwest/west, they would put a whole lot more in their pockets.

 

What do you got a YouTube channel or something giving out all that bad advice?

 

You should follow your statement with......"in my opinion." I gave mine, you didn't give one. Big difference right from the start.
The advice is an OPINION, which is largely what message boards are made of, OPINIONS. I gave mine, and I stand by it. Right now, if you live in Jacksonville, Florida and you are like 90+ percent of O/O's, you don't work directly with shippers. You take brokered loads. If you are running only regional in the Southeast (because the poster said, he needed to be home every weekend) if this is the case, you are averaging a DV spot of 2.80 in that area, and when you go up I-95, you aren't getting much more, but you have to be home every weekend, so you can't place your truck in the Midwest where DV spots are 3.30 right now. Common sense tells any human on earth, if you can go to the Upper Midwest by being out on the road for 2 weeks, then coming home for 3-4 days, you are going to make more money. Actually, that's not even an opinion. That's a fact.

If you are an electrician, a nurse, a freaking dog trainer, whatever it is you do, if state A pays more than state B, then obviously you are going to make more money by working in state A, and as truckers who can run OTR, we don't physically have to get up and move to State A to make that money, we just simply have to put our truck there. Tha'ts pretty common sense sound advice.