Pros and Cons of Being an Owner Operator

The Good, the Bad, and the Ugly

View my Other Posts:

A Holiday Wish
Blogs, Forums and Other Resources
Texting Ban
The Way it Was - A Short History of Trucking

FAQ for the Owner Operator
Pictures
Anti-Idling Regulations
Definitions and Industry Terms
Blackrock Auxiliary Power Unit (APU)
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy Policy
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
4) Operating Authority or Leasing?
5) Equipment
6) How To Do Bookkeeping and Other Necessary Paperwork
7) What You Need to Know About Loadboards
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes
10) Truck Driving Schools

Pros:

You are not tied down to a 9-5 job.

You can make a lot of your own decisions.

You can make a decent living.

You get to "be your own boss".

You get to see a lot of this beautiful ol USA (and maybe Canada and Mexico).

Cons:

You are not working a 9-5 job.  You will put in 20 hours days.  You will go without sleep, food, and showers.  You will do a lot of sitting and waiting.  Waiting to get a load, waiting to get loaded, and waiting to get unloaded.

You will be gone from home - a lot.

You must make a lot of your own decisions:  Do I buy tires, or have the engine rebuilt?  Do I take this cheap a** load so I can get home, or do I sit out here in the boonies for 3 days waiting on a decent paying load?  If I wait on a decent paying load, how much am I going to lose by not working for 3 days?

You can make a decent living, if you work your butt off, but it is getting harder and harder to do.  Every day freight rates are cut and you are forced to haul for less money.  Rates are no higher than they were 20 years ago, and in many instances, they are lower.  Most of the money you make will go back into the truck.

You get to "be your own boss", with all the decisions, troubles, and headaches that come with being a business owner.

I would like for any current truck drivers who may be reading this to add to this list by making a comment.

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Blackrock Auxiliary Power Unit APU Information for the Owner Operator

My Problems with a Blackrock APU

See my other posts:

A Holiday Wish 
Blogs, Forums and Other Resources

The Way it Was - A Short History of Trucking

Pro and Cons of Being an Owner Operator

FAQ for the Owner Operator
PicturesAnti-Idling Regulations
Definitions and Industry Terms
Interactive Cost per Mile (CPM) Calculator Spreadsheet 
Privacy Policy
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit 
4) Operating Authority or Leasing? 
5) Equipment
6) How To Do Bookkeeping and Other Necessary Paperwork 
7) What You Need to Know About Loadboards 
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes 
10) Truck Driving Schools

  BLACKROCK APUs are no longer being manufactured, as the company has gone out of business.

Subject: Misrepresentation of online advertising of Blackrock Evolution Auxiliary Power Unit (APU).

Complaint: I researched APUs for about a year and in September 2008, finally decided to purchase a Blackrock Evolution because 1) It is available with a 5.2 kW generator, 2) It has an optional “Quiet Comfort” kit, 3) It has a programmable digital electronic control unit (ECU) with a battery monitor, which keeps the batteries charged 4) There is a nearby service center, and 5) It has higher BTUs than any other APU I researched. The old control unit had a battery monitor, but it only told you when the batteries were low, it did not keep them charged.
After the APU was installed on my truck, I was told the one I purchased did not come with an programmable digital ECU. I was told mine was an older model (Rev 6), and if I wanted the programmable digital ECU, I would have to upgrade and purchase one for about $1,200.00 to $2,000.00 (every time I was told I could purchase it, I was given a different price). When I purchased the APU, no one told me it was an old unit. Blackrock uses the term "Rev" to mean "Revision".

 
It took many phone calls and communications with both Blackrock and their dealer, Cleveland Brothers, before I got any satisfaction from either; then it was only from Cleveland Brothers, Blackrock never even responded to my certified letter of complaint.

Why I feel the programmable digital ECU should have been on the APU I purchased:

I have screen shots of Blackrocks website, stating that the programmable digital ECU is standard, not an option or an upgrade.

 
Since I contacted Blackrock on 24 September 2008, concerning this matter, they added one web page, buried under “News”, stating the battery monitor is a retrofit option for

Revs. 1 – 10 Standard Feature on Rev 11 forward”

and added one web page (also under “News”) stating,

"modular electonics is available as a BLACKOCK® APU product upgrade, our team of engineers have designed a feature that moves the APU’s electronics to a protected environment. This upgrade will protect the APU’s electronics from corrosion and debris. Offered as an upgrade only Available for Revs 1 – 10”, then below that it says, “revs 1 – 11”.

and changed one web page "Options" by adding

"New Programmable Digital Electronic Control Unit (for revisions 14+)”

Still on their web site (as of today, 04 March 2009), is their Product Specification Sheet, which lists the ECU as a feature, and it is not included in the options section. It does not mention any upgrade, or any particular model or Rev., and Product Specification Chart, which lists the ECU as a feature, and it is not included in the options section. It does not mention any upgrade, or any particular model or Rev. Also, if you click on “Electronic Control Unit” on http://www.blackrockapu.com/BLACKROCK-EVO.php it describes the ECU, but does not mention it being an option, an upgrade, or only being on certain models or revisions.

 
I cannot prove the added or changed pages were added or changed after I called Blackrock, but I can show screen shots of Blackrocks various web pages, or screen shots of various pages of their pdf files (e.g. user guide) showing dates ranging from March 2008 to August 2008 (before we purchased our APU). All of these pages either list the ECU as a feature, or omit it as an option. Not one of them say anything about an upgrade or being available only on certain “revisions”. In the Evolution User Guide Version 1, Rev 1, http://www.blackrockapu.com/EVO-User-Guide.pdf which describes the operation of the ECU, it is not listed with the other options under the options section.

 
DETAILS

 
I have been researching APUs for about a year. One of the ones I looked at was a Blackrock. I thought I would like the Blackrock for several reasons, among them the high BTUs; the many features of the digital programmable digital electronic control unit (ECU), with new battery monitor which keeps the batteries charged; and the fact that there is a Cleveland Brothers Equipment service center within 20 miles of where I live, which is an installation and repair center, but not a dealer; the Quiet Comfort option; and the availability of the 5.2kW generator. The Hunker, PA facility is over three times that far from me.

 
After looking at Blackrocks web site and reading all of the information numerous times, I called, the contact person listed on Blackrocks web site, at Cleveland Brothers Hunker, PA facility.

 
When I asked the contact person a couple of questions about the unit, he referred me to Blackrocks web site for details. After calling him several more times gathering additional information, I finally decided the Blackrock Evolution, with the Quiet Comfort option, was the APU I wanted. I asked him if he had one in stock, or if it had to be ordered. He said he had one in stock. I asked if it had a 3.7 kW or a 5.2 kW generator, and he said it had a 5.2kW generator.

 
On 28 August 2008, I called Owner Operator Services, Incorporated [OOSI] (a division of Owner Operator Independent Drivers Association – OOIDA), to apply for a loan. I was faxed the paperwork. I filled it out and returned it on 02 September. Upon learning of our loan approval on 04 September, I called Cleveland Brothers and scheduled an appointment for installation. The appointment was scheduled for 15 September. This date was chosen as I was leaving on vacation on 18 September and I would be able to pick the truck up before I left, as I was told the installation would be finished on 17 September.

 
I notified OOSI that we would be picking up the truck on 17 September, and was told that after we inspected the unit and it met with our approval, the money would be wired to Cleveland Brothers, and that it would take about two hours for the transfer.

 
On 12 September, I took the truck to Cleveland Brothers to leave it to have the installation done. On 16 September, I called Cleveland Brothers and was told the truck would not be ready on the 17^th. I told them as I was leaving on the 18^th, I would have to wait until the 22^nd to pick up the truck. They said that would not be a problem. I did not call OOSI and tell them that we would be picking up the truck at a later date.

On the 22^nd , I went to Cleveland Brothers to pick up the truck. Upon arrival, I found out that OOSI had already paid for the APU on the 17^th.

 
The contact person started the APU, and showed me how it had been installed, how it worked, etc. When he picked up the control unit, I asked for the operation manual and for him to show me how to program the unit. He said the APU was not shipped with an operation manual, but he had one faxed from Blackrock and gave it to me. He said they would mail me a copy of the original. The one they faxed and the one they mailed to me were copies of the one from the website, and both had the operating instructions for the programmable digital electronic control unit.

He also told me the control panel was not programmable. He said that he had just discovered that Blackrock had upgraded the control panel to a programmable one, but it would cost $1,800.00 to $2,000.00 dollars, and I would have to pay for it if I wanted it.

As OOSI had already paid for the unit, I took the truck home. Immediately upon arriving home, I called Blackrocks customer support and spoke with service representative, Julie Adams, and asked about the programmable digital ECU. I was told that Cleveland Brothers had ordered the APU they installed on our truck in February 2008, before the control unit had been upgraded. Ms. Adams told me to talk with Cleveland Brothers, but there was nothing Blackrock could do, except to sell me the upgrade.

I asked her how I was supposed to use the control unit which came with our APU, as the instructions were all for the new programmable digital ECU. She faxed me seven pages of a user manual containing the instructions for the control console that came with my APU. The faxed copies were almost unreadable, and the “pictures” were just black blobs.

On the 23^rd, I spoke with the contact person at Cleveland Brothers and he told me that he did not know about the upgraded electronic control unit until the 19^th, when a customer called and asked about it. I told him that when I researched Blackrocks web site, it showed the programmable digital ECU, and nowhere did it say anything about the unit being upgraded, or there being an older non-programmable unit. He said that after I got home, I decided I wanted something better, and thought I could get it without paying for it. He also told me that was not possible that I had seen the programmable digital ECU on Blackrocks website before I purchased mine, as Blackrock had just added the new unit to their site sometime after 12 September.

However, on Blackrocks web site, it had a PDF of the user manual for the Evolution, which explained in detail how to program the digital electronic control unit. I had downloaded and printed this manual. I had read it several times before I decided to purchase the Blackrock Evolution. The document properties show this manual was created on July 15, 2008.

Blackrocks web site also had a Evolution product specification sheet (PDF) which clearly states that the Programmable Digital Electronic Control Unit is a feature (not an option). According to the document properties this is dated 31 July 2008.

It also had a Evolution product specification chart (PDF) which listed options, but again, the ECU was listed as a feature, not an option. This chart was dated 07 August 2008 on the document properties page.

There was also a news release on Blackrocks website, dated 27 March 2008 introducing the Blackrock Evolution. In that release, it states, “it comes standard with the same robust, high performing features as its big brothers, including a battery monitor to keep batteries charged and an electronic control unit that can be programmed to perform a wide range of functions.” The news release also lists the options, but once again, the ECU is listed as standard, not optional, and does not say anything about it only being on certain revisions.

Also, Blackrock has a picture of the of the programmable digital electronic control unit on their web site and I have a screen shot of the image properties, which shows it was added to Blackrocks web site on 29 July 2008. No where on their site, did it show or mention the control unit which came with my APU.

The Cleveland Brothers contact old me the only recourse I have is to purchase the programmable digital electronic control unit at Cleveland Brothers cost. He then told me to wait and he would see what he could do.

 
On 24 September, I checked Blackrocks web site and found it had been changed. The digital programmable electronic control unit is now listed as an option – on one page only – the other pages (specifications chart, specification sheet and press release), still do not list the programmable digital ECU as an option. There were also two web pages listed under “Update”. One says the battery monitor is a “Retrofit Option for Blackrock APU Revs. 1 – 10. The other upgrade page says the APU electronics have been moved to “a protected environment”. However; both the product specification chart, the product specification sheet, and the press release are still on the Blackrock web site.

Also on 24 September, I had not heard from Cleveland Brothers contact, so as I am a member of Owner Operator Independent Drivers Association (OOIDA), I called them about this matter. Blackrock is a corporate supporter of OOIDA and I thought they could give me some advice regarding this issue. I spoke with a man named Bruce, explained our problem and sent him some of the screen shots. He told me he would call me back. When he called me, he told me he had spoken with “the owner” of Blackrock and told him of our problem. Within 15 minutes of my being informed of Bruces call to Blackrock, the Cleveland Brothers contact called me and told me told me that Cleveland Brothers would order and install the ECU. I asked if there be any charge, and he said, that although he didnt think it was right, there would be no charge.

He also told me that Blackrock would be unable to ship the ECU until November. I was not happy about that, but accepted it.

On 25 November, having not heard from Cleveland Brothers, I called just to see the when the ECU would be in. The contact told me that it could not be shipped for several more months yet. He also told me that Cleveland Brothers would only pay for the installation, not the programmable digital ECU. When I told him that is not what he told me in September, he again started saying that I knew what I was buying and that after I got home, I decided we wanted something better. If that were the case, why would I have asked him to show me how to program the programmable digital ECU while I was still at Cleveland Brothers facility dealership when I was picking up the truck on 22 September and then immediately call Blackrock as soon as I got home?

 
After much discussion, the Cleveland Brothers contact agreed to initiate a three-way phone call with himself and his “boss”, Tony, myself and Blackrock on 02 December. By 12 December I had heard not one word from the contact. If he were having difficulty getting the call together, he could have called and told me that. By not contacting me at all, I can only surmise that he was avoiding me and thought that if he put this off long enough, I would go away.

On 12 December, I called the contact and left a message. He promptly returned my call. He told me again that he can not get the

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4 Operating Authority or Leasing as it Applies to the Owner Operator

2001 Kenworth T600

 

Becoming An Owner Operator

4) Operating Authority or Leasing?

See my other posts:

A Holiday Wish

The Way it Was - A Short History of Trucking

Pro and Cons of Being an Owner Operator

FAQ for the Owner Operator
Pictures
Anti-Idling Regulations
Definitions and Industry Terms
Blackrock Auxiliary Power Unit (APU)
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy Policy
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
5) Equipment
6) How To Do Bookkeeping and Other Necessary Paperwork
7) What You Need to Know About Loadboards
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes
10) Truck Driving Schools

I hope you got here by reading my previous posts (numbered 1 - 10) first. If not, I advise you to go back and do so. This post wont help you if you cant get the financing for a truck. If you dont understand how you will be making money (net), then I you are not ready for this step.

If, on the other hand, you understand that you will not get rich by owning your own big rig, have checked your credit report and Fico score, cleaned up all of your debt problems, and are sure you can secure a loan, then read on!

There are two types of owner operators. The one with their own authority, and the leased owner operator. For the purposes of this post, I am assuming you will be driving your own truck. If you are planning on hiring a driver you would be an owner, not an owner operator, but most of this information would still apply.

Your own AUTHORITY: This means that you are a “trucking company”. You will probably have to buy a trailer. You will have to get your own permits, and pay your own taxes. You will have to find your own freight.

The three different types authority are: Common Carrier, Contract Carrier, and Broker Authority.

COMMON CARRIERS provide for-hire truck transportation to the general public. Common carriers must file both liability (bodily injury & physical damage) insurance and cargo insurance.
The definition of an "authorized for-hire” carrier is a person or company that provides transportation of cargo or passengers for compensation. If you are a for-hire carrier, in addition to the USDOT Number you will also need to obtain an Operating Authority (MC Number). CONTRACT CARRIERS provide for-hire truck transportation to specific, individual shippers, based on contracts. Contract carriers must file only liability (bodily injury and physical damage) insurance.

A contract carrier cannot broker loads without first applying for and receiving a license to operate as a broker of freight.

BROKERS (brokers are not owner operators) arrange for the truck transportation of cargo belonging to others, for compensation, utilizing for-hire carriers to provide the actual truck transportation. Brokers must file either a surety bond or trust fund agreement.

If you want to get your own authority, there are lots of companies that can help you, such as (OOIDA). We are members of OOIDA and have been since just after they started, about 30 years ago. They are one of the best things I have ever spent my money on. Membership dues are only $45.00 a year, but sometimes they run a special. Includes a subscription to “Land Line” magazine.  In addition to helping you get your own authority, they offer discounts and rebates on equipment, as well as financing, they have truck, health, and life insurance, a drug and alcohol consortium, retirement plans, fuel cards, load boards, business information services, and much more!

Most owner operators are leased to a trucking company – a common carrier or a contract carrier. Actually, you are not leased, your truck is. When you lease your truck to a trucking company, they provide you with services and charge you for them (see "Income and Expenses" post).

What services they provide and how much they charge you varies from company to company, so ask a lot of questions before you lease on your truck and find out exactly what they do and what you would have to do.

Some of the common services provided:
1. they buy your license plates (and usually you have to reimburse them,

2. they pay fuel taxes,

3. they buy the permits,

4. they do all the record keeping and reporting for fuel taxes and permits, and/or

5. they provide you with a trailer (charging you rent).
 
These are all things you would have to do and pay for yourself if you had your own authority.
 
You need to check with trucking companies and see if they have enough freight and if they are leasing on more trucks. Ask other drivers of the company you think you might like to lease to if they are happy (they will probably say no), how much they gross, and how much they net (they will probably lie), and if they are planning to stay with the same company they are leased to. Why did I say they will probably tell you they are unhappy? Because truckers are notorious for complaining. They complain about the dispatchers, the loads, the dispatchers, the truck, the dispatchers, the pay, and, oh, did I mention the dispatchers? So, when they tell you how unhappy they are, ask them how long they have been with that company. If it is more than a year or two, they are probably happy. I also called them liars, but in reality, they just like to stretch the truth. Most people will tell you they are doing a lot better than they really are, but then you also get those who just like to exaggerate in the other direction. Ask to see their revenue statements. A lot of them will be glad to show you.
 
After you have asked all of your questions, DONT sign your lease until you have read it completely and understand what it says.
You are the lessor (the party who is giving the right for the use of the equipment).  The company is the lessee (the party getting the use of the equipment).
 
The lease is a legal contract.  It spells out what what percentage or mileage rate they pay, what expenses you are responsible for, and what expenses they are responsible for.  It should tell you when you will be paid and how (percentage or mileage).  It will tell you who is responsible for fines, damages, and losses. It will tell you if you have to have an escrow account.

"Escrow fund – Money deposited by the lessor with either a third party or the lessee to guarantee performance, to repay advances, to cover repair expenses, to handle claims, to handle license and State permit costs, and for any other purposes mutually agreed upon by the lessor and lessee"

Although you can be required to carry insurance on your equipment, you can not be required to buy your insurance through the company you are leased to.  They can not require you to have work done in their shop, rent or buy equipment (covers anything from load locks to trucks) from them, or buy their fuel.  You are an independent, and as such have the right and option of obtaining your own services or equipment from where ever you want.  This does not mean that you cant use their equipment of services, it just means you cant be required to.
 
If you are being paid a percentage, you have a right to see the freight bills, showing the amount the load pays.
If you have your own authority, none of the leasing information applies to you unless 1) you lease a truck from someone else (you are the lessee) or 2) you lease your equipment to someone (you are the lessor), which you can do.

Alphabet soup definitions:

USDOT: United States Department of Transportation

MC: Motor Carrier

FMSCA: Federal Motor Carriers Safety Administration

OOIDA: Owner Operators Independent Drivers Association

ICC: Interstate Commerce Commission. An agency which used to regulate the trucking (and railroad) industry, but is no longer in existence. It was disbanded in 1995.

IRP: International Registration Plan is a registration reciprocity agreement among jurisdictions in the United States and Canada which provides for payment of (truck) license fee on the basis of fleet miles (even if it is only one truck) operated in various jurisdictions

HUT or HVUT: Heavy (Vehicle) Use Tax - A federal tax imposed annually

CDL: Commercial Drivers License

IFTA: The International Registration Plan (IRP) is a reciprocal agreement that authorizes the proportional registration among the jurisdictions (states) of commercial motor vehicles. This means if a truck is operated in multiple jurisdictions, the owner must annually report mileage driven in each state and taxes are paid proportionately based on the mileage driven. The good news is the owner may pay those taxes in one jurisdiction—referred to as the base jurisdiction or base state. Vehicle owners are required to register under IRP, if:

• their vehicle is over 26,000 pounds gross vehicle weight (GVW); or
• has three or more axles, regardless of weight; or
• is a power unit and trailer whose combined GVW is in excess of 26,000 pounds, and
• your truck operates in at least two IRP jurisdictions

Resources:

FMSCA frequently asked questions – registration and licensing: "FMCSA"

Next post: What You Need to Know About Equipment

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I am sorry I have to do this, but due to spam "comments"  I feel I need to moderate comments from now on.

I am sorry for any inconvenience this may cause to my legitimate commenters.

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6 How to Do Bookkeeping and Other Necessary Paperwork for the Owner Operator Permits and Taxes

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2000 379 Peterbilt

What You Need to Know to Become an Owner Operator

6) How to Do Bookkeeping and Other Necessary Paperwork
Permits and Taxes

 

View my Other Posts:

A Holiday Wish
Blogs, Forums and Othrt Resources
Texting Ban
The Way it Was - A Short History of Trucking

Pro and Cons of Being an Owner Operator

FAQ for the Owner Operator
Pictures
Anti-Idling Regulations
Definitions and Industry Terms
Blackrock Auxiliary Power Unit (APU)
Interactive Cost per Mile (CPM) Calculator Spreadsheet
Privacy Policy
1) Owner Operator 411 – Welcome
2) Income and Expenses
3) Financing and Credit
4) Operating Authority or Leasing?
5) Equipment
7) What You Need to Know About Loadboards
8) Companies That Lease Beginning Owner Operators
9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes
10) Truck Driving Schools

Keep in mind that we have been doing this since 1972, so we will probably miss some stuff. If you dont see what you are looking for, just ask. It is difficult to describe something that to you is routine, but is all Greek to someone else.

Think about when you were learning to use the computer for the first time. You might have asked someone, “How do I find information about ACB company?” The old hand may have said, “After you open your browser, just type their address into the search bar.”

You were probably thinking, “What is a browser and how do I open it? How in the heck do I know what their (mailing) address is? What is a search bar and where do I find it?” To the person explaining it, they were very clear and made perfect sense. To you, their explanation was as clear as mud.

I will try to keep that in mind, but as I said, if I miss something, or dont explain something well enough, let me know and I well see if I can confuse you some more, uh, er, sorry, I mean clear it up.

My advice is to find a good accountant who knows the trucking industry.  The rest of this article is to just give you an overview of what and how expenses are counted.  Keep in mind that for every rule the IRS has, there are several exceptions. 

Where to begin? When I first started as an owner operator, in 1972, there was no such thing as a computer. Everything was done by hand! Can you imagine? At least we had adding machines, but I cant tell you the number of times we would spend a couple of hours going over a column of figures trying to find a mistake.

Today all you need is a computerized spreadsheet, or better yet a bookkeeping program. I first started out with something called Lotus. I am now using an old (2000) version of Quicken. It does the job for me, and I dont have any need to change. What program you need to use depends on what you need to track. If all you need is to keep track of is your income, expenses and mileage, any bookkeeping program will do. If you need to track information so you can do your own permits and fuel taxes, or if you plan on hiring an employee, you may want to consider a bookkeeping program geared to the trucking industry. There is a lot of trucking software around, but having never used any, I cant recommend one. If any readers have used any trucking bookkeeping software, especially owner operator software, please leave a comment and tell us what you use, what you use it for, if you like/dislike it and why.

Since the company I am leased to does all of the fuel and mileage taxes, and permits, we dont have a lot of bookwork to do, as we used to. We dont use an accountant. We never did. My wife kept track of the income and expenses and we would take the totals to a tax preparer to have our income taxes done. After finding mistakes for 3 or 4 years, and having to take them back and have them redone, she got tired of that and decided she could do the job as well as they could. She started ordering tax books from the IRS (now days you can get them online), and she started doing our taxes herself.

What kind of paperwork you will need to do, will depend on several factors. There is one rule that cant be broken, however, no matter what else you do: KEEP ALL OF YOUR RECEIPTS! For everything (except maybe meals – see later).

Before I go any further, I want to remind you that we are in the trucking business – not the tax business. Anything I say, you should have checked out by someone - an accountant or tax professional. See "Income and Expenses"

The information I am giving is just our experience and should be used only as a starting point, so you will know what questions to ask of your accountant or tax professional, and to help you understand what they are talking about.

How much of the following you, personally, need to do depends on how much someone else does for you, such as the company you are leased to, or an accountant you hire.

If you are unsure if the person you are going to knows trucking specifically, find someone else. If they give you information that doesnt sound right, call the IRS (or OOIDA) and ask about it. A good source for tax information is trucking magazines and organizations. Owner Operator Independent Drivers Association (OOIDA) is excellent – yes I am a member, no I dont get anything for plugging them. Most trucking magazines will run articles during tax season about tax questions specific to trucking, and some even have monthly tax columns.

If you are an independent owner operator – that is if you have your own authority, you will have to keep (or hire someone to do it for you) records for: every expense, all income, all capital (equipment) expense, miles run in each state, total miles, fuel purchased in each state, total fuel, and drug and alcohol testing (yes, even if you are the only person in your company).

The DOT tells you how drug and alcohol testing has to be done.  They have very specific rules about pre-employment, random, and post-accident testing.  The most difficult thing for the person who has their own authority and no employees, is the random.  In spite of what you might think, you cant just get up one day and say, "Well, I havent had a drug or alcohol test for a while, guess Ill go have it done today."  Oh, Nooo!  You have to select a "random person" on a "random basis" to have a drug and alcohol test, and you must keep very detailed records about who, how, when, and why.  The easiest way to do all of this is to hire a consortium. A consortium pools a lot of individuals together, pulls the random draws and does all of the required paperwork and record keeping.

As I said before, I am an OOIDA member, and I think they are one of the best things that ever happened for the owner operator.  OOIDA is a full-service organization and help with drug and alcohol testing for you, as well as help you get your own authority and permits. They have owner operator insurance, trucking and personal vehicle insurance, medical insurance, retirement, financing, and tons of information about the trucking business.  Membership fee is only $45.00 a year, which includes their very informative magazine, Land Line.

If you are leased to a company it depends on how much, if any, of the above they take care of on your behalf. Whatever they dont do, you have to.

As I said, keep all of your receipts for everything. If you hire an accountant, you take your receipts and settlement income (pay) statements to them. Some people I know put these receipts in folders with different categories. Some people will even total those categories, but most owner operators I know throw all their receipts in a box and take the box in to their accountant, complete with spilled french fries. Most accountants require that you take this box to them at least once a month.

The perfect way, although I dont know anyone who does this, would be to have a laptop, and enter each expense at the time you buy something, or as soon as possible afterward. I dont advise you to try to enter your toll receipt while driving (ha, ha).

If you are going to be keeping the books yourself, whether or not you do your own taxes, you should enter everything as soon as you can – usually at least weekly. It is so easy to put it off and the first thing you know, it is tax time, and you havent made but one or two months worth of entries.

What records you keep and how you keep them will depend on what type of entity you are. Are you a sole proprietor, a partnership, a LLC, an S corporation, or a corporation? Most likely you will be a LLC.

If you are a sole proprietor, you will use your social security number as your tax number. For all other entities, your will have to file Form SS-4, Application for Employer Identification Number - EIN (you can also file for a EIN online). Its FREE!

If you are a sole (single) proprietor (owner) it is fairly easy to keep records, as everything is 100% yours, income and expenses.

You are also 100% "at risk", meaning all debts, but more importantly, all judgments against your business. In other words, if someone wins a lawsuit against your business, even if your business files bankruptcy, you are still liable for the debts.

You are required to file a Form 1040 Schedule C (or C-EZ) - profit or loss from a business - sole proprietorship, and a Schedule SE - self-employment.

If you are a partnership, it becomes a little more complicated.  How is the partnership split?  50/50? 60/40? Something else?  It makes a difference when you file your taxes.  If it is 50/50 and you buy a $100,000 truck, each of you owns $50,000 worth of the truck.  Each of you will share 50% of the income.  If you financed the truck, then each of you is responsible for 50% of the debt.  Now apply that to 60/40 or some other percentage.  See, it is getting a little more complicated.  Now are both of you active partners?  An active partner is one who participates in the partnership.  For example, you drive and your spouse does the bookwork and record keeping.  You are both active partners.  However, if you drive and you hire an accountant, and your spouse doesnt do anything else, then your spouse is a passive partner, but if you and your spouse drive team, then you are both active partners.  Another example:  Your brother paid for the truck and wants a percentage of the profits in return, but you do all of the driving, maintenance, and everything else.  He is a passive partner.  Now, what if you have more than one partner? Some of them could be active and some could be passive.

Which partners are "at risk", and for how much? Are any of them guaranteed a set payment, no matter how much the partnership nets?

You are required to file a Form 1065 (with a Schedule K) - partnership, and give a Schedule K-1 to each partner. 

The partnership does not pay taxes.  It passes all profits and losses on to the partners using a Schedule K-1.  Each partner is required to file on their Form 1040, a Schedule E - supplemental income and loss, and a Schedule SE - self-employment. Each partner then takes his share of profits or losses on their Form 1040 based on the amounts on the Schedule K-1.

A LLC is a Limited Liability Company.  It used to be that if you werent a sole proprietor or a partnership, then you had to be a corporation or S corporation (small corporation).

Now they have the LLCs (Limited Liability Corporation) which is a relatively new business structure allowed by state statute.

LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC.  The reason the owners have limited personal liability is because the LLC is required to carry liability insurance usually for about one million dollars.

Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation (the LLC doesnt pay taxes, but "passes through" the tax liability to each member).

Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities.  There is no maximum number of members. Most states also permit “single member” LLCs, those having only one owner.  Some kind of "Articles of Organization" with your state will be required before becoming an LLC.  A limited liability partnership is called a LLP.

Individual members file a Schedule C, partnership members file a Form 1065, and corporations file a Form 1120 or 1120S.

All of this may make a difference in how you track your expenses and income.

When you become an owner operator, you become a businessman, excuse me, businessperson, and you also for some purposes become an employer (even if you dont hire an employee). Because of that, you must pay self-employment taxes on your earned income, which consists of both the employer and employee share of taxes (you are, in effect, hiring yourself). These must be paid to both the Federal and State tax departments. On the other hand, you get to deduct amounts for an IRA (Individual Retirement Account), a SEP (Simplified Employee Pension) plan, health insurance, and 1/2 of your self employment taxes. There may be limits on some of these deductions, so be sure to check it out.

Speaking of being an employer, you can pay your children to wash your truck, your spouse to keep the books, or mother to be a co-driver. These payments are deductible, but you have to pay employer taxes on the amount you pay them (unless one or all are co-owners), and they have to pay income tax on what they earn from you.

On the subject of spouses, if you and your spouse share management decisions, you are automatically considered a partnership by the IRS, unless you elect not to be.  If only only of the spouses makes the decisions, and you dont have any other partners, then you will be a sole proprietor and you can hire your spouse, such as to do the bookkeeping.  If you do not "opt out" of being a partnership with your spouse, then you have to file a partnership return (Form 1065), an you each share in the expenses and income on a Schedule K-1.   See:  IRS site:  "Husband and Wife Business" for details.

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Interactive Cost per Mile CPM Calculator to Aid the Owner Operator

How Much Does an Owner Operator Make?

Interactive CPM Calculator 

See my other posts:

A Holiday Wish

The Way it Was - A Short History of Trucking

Pro and Cons of Being an Owner Operator

FAQ for the Owner Operator

Pictures

Anti-Idling Regulations

Definitions and Industry Terms

Blackrock Auxiliary Power Unit (APU)

Privacy Policy

1) Owner Operator 411 – Welcome

2) Income and Expenses

3) Financing and Credit

4) Operating Authority or Leasing?

5) Equipment

6) How To Do Bookkeeping and Other Necessary Paperwork

7) What You Need to Know About Loadboards

8) Companies That Lease Beginning Owner Operators

9) What You Actually Need to Get Started - Licenses, Permits, Insurance, and Taxes

10) Truck Driving Schools

To use: Just fill in the boxes on the lower part of the chart. The results will automatically fill in the boxes on the upper part of the chart. Depending on what you enter, the results can give you your Cost per Mile, Cost per Day, Income per Mile, Income per Day, Expense per Mile, Expense per Day, Net per Mile, Net per Day, Average Miles per Day and your Expenses to Income percentage.

You can enter actual amounts if you already have a truck (useful when doing your taxes, too), or you can play around putting in different figures to see "What If?", as in "What if I paid off my truck?" or "What if the price of fuel goes up (or down)?" 

If you are wanting information about becoming an owner operator, you probably want to know how much much it will cost you to get started, and how much money you will make, or even if you can make money if you buy your own equipment.

These are all good questions that need answered before you take the plunge and spend all that money on a tractor trailer rig. I have developed a Cost Per Mile (CPM) calculator to help you answer these questions.

After you get a good grip on your initial outlay, this calculator will help you with the numbers you will need to write a business plan for when you go to the bank to get financing.

These are questions no one can give you a dollar amount on. It depends on many factors and variables (see previous posts). You need to determine how much you will be paying for your truck, find out how much your insurance payments will be, and find out how much loads pay at the company you want to lease to. You need to figure in all expenses, including Miscellaneous (paper towels, glass cleaner, etc.). 

Enter these amounts in the spreadsheet and you will get a rough answer to the questions above.
 
If you are thinking of getting your own authority, then this spreadsheet will help you determine how much you would need to charge to haul each load.
 
You need to talk with other owner operators (see “Income and Expenses” post). You need to determine what you will be hauling, and to where. You need to find out approximately how much these loads pay. If you are going to lease to a company, you need to find out what expenses they will pay and what expenses you will need to pay (taxes, permits, etc.). Do they pay a fuel surcharge?
You need to get a rough estimate of what other expenses you will have: truck/trailer payment, licenses, permits, insurance, cell phone, accountant, etc.
What else are you going to have to buy? Will you need tarps, chains and binders? What about straps or load jacks and hand tools?
 
If you dont even know what some of this stuff is, then you need to ask more questions and talk with more drivers.   Be sure to ask your questions in the comment section.
 
You need to determine about how many miles a year you will have to run to deliver the loads the lease company contracts for, and how many days you will be on the road.
 
After you get all of these numbers, then it is time to use the calculator.

Be sure to subscribe to this blog to get the latest and newest information.
 
I am interested in knowing if you found this calculator useful.

Please CLICK HERE to open, not on the chart below. Interactive CPM spreadsheet by Google (Will open in a new window):

OR

Please CLICK HERE to open, not on the chart below. Interactive CPM spreadsheet by Zoho (Will open in a new window):

Please note that by clicking on the above links, you will leave this blog and enter docs.Google.com or Zoho.com The information that Google and Zoho collect and maintain as a result of your visit to their web sites may differ from what I collect and maintain (see my Privacy Policy).

I am sorry I have to do this, but due to spam "comments"  I feel I need to moderate comments from now on.
I am sorry for any inconvenience this may cause to my legitimate commenters.

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