New Article From Old School About Buying Or Leasing A Truck

The owner ops deduct everything when it comes to taxes..... The tax breaks are incredible .... having to look at their financials for insurance purposes, I have seen small companies with 8 mil in revenue that deducted the hell out of down to 500k lol

Greetings! Thank you for the interesting information. Would being an owner operator be viable in a case where a spouse has a good income and large tax breaks are needed more so than a large income? Other scenarios where it makes sense? Would appreciate any input. Thank you

Allow me to say that I am still a trainee and as such are virtually totally ignorant regarding this subject, but I will comment anyway.

I'm in the TNT phase of training at prime, and I must say I've been treated very well by prime so far. No major complaints.

That being said, EVERYONE I've spoken to at prime, specifically lease drivers, all UNINAMIOUSLY say I should go lease. You do the exact job a company driver does and make (insert figures ranging from $1,500- $3,000 more per week).

It would be foolish of me to dismiss your opinion on this subject, however it would be equally foolish for me to dismiss descriptions of their personal experience. I have been told they are "walk away" leases so you can return the keys with no penalty, and they receive a bonus at completion of a 2 year lease ranging from 13-23k (low being solo driver, high being a TNT trainer getting "team" miles.

The guy I'm with now suggested maybe in a year to try a 3 month lease to see if it was to my liking.

The reasons I would consider going lease are -Additional income potential (agreed with the additional risks) -Freedom to go where you want (refuse loads you don't want, although I think that would be a very rare occurrence, if at all) -Freedom to take home time Moreno my terms.

Reasons to be company driver -All the risks associated -all the reasons you recommend against -(most importantly) my wife does not like the idea.

Basically I'm very confused about this. Regardless, I wouldn't go lease for at least a year, if ever.

I am currently with Prime in my 9th month here. Company driver. I hear of a few lease guys doing well but in my honest opinion it would be way to much especially coming out of the gate. Me personally I wouldn't lease. I get to learn the business and make mistakes that don't cost me huge amounts of money potentially bankrupting me. I have talked to a few guys lately myself who want to come back to the company side because they aren't doing so well. One of these is a good friend of mine I made since being with Prime. She has a good work ethic and seems to be constantly running however her revenue to her truck is not what she imagined it would be. Not trying to tell you what to do just however consider being new to Prime you don't know about our freight lines, how the system is run at Prime ( I have been here 9 months and just now figuring the system out to where I am really truly comfortable) I could never imagine trying to learn all that while having major bills coming in each week also such as truck payment, tire fund, maintenance fund. Also you will have to provide your own health insurance and in todays world that is huge. Just something to consider. Best of luck in whatever decision you make. Just really think it through.

Ok everyone, great comments we've been getting! Really appreciate the feedback!

I would never advise anyone to lease his truck to 99% of the companies running the highways. The trick, I believe, is find a company that fits you and your plan.

Well that doesn't sound encouraging! Only 99% of your options are no good? Fantastic.

I don't figure to retire a millionaire, only a man living his dream and being paid a decent wage.

See, herein lies the problem with most people's approach to owning a business, and I've said this many times before.

If you own a business and yet you're only making a worker's wages for the job you're doing then you're failing as a business owner.

Why? It's simple.

You're taking on all sorts of extra commitments, work, and risk while giving up all sorts of creature comforts and benefits for little or no gain in pay. That's not being successful in business. That's called "buying yourself a job" and it's not something anyone should be content with. I realize lots of people are content with that, but it makes no logical sense whatsoever.

You're basically saying, "I don't want to make $50,000 per year just driving a truck. I want to make $50,000 per year driving a truck and putting my financial life on the line and doing all sorts of extra work and making all sorts of extra commitments and giving up all sorts of company benefits.

How does that makes any sense?

Fortunately for the people running these companies, the ones who are the making the big money, there is no shortage of people willing to take on all of that extra risk and work and trouble basically for free. Alleluia for them. So all they have to do is book the freight, take their cut, and pass all of the headaches and risks onto you. Oh, and then laugh all the way to the bank.

And if you break your leg and can't drive for 6 weeks, go deep into debt, and ultimately lose the truck they don't even blink. They grab the next guy in line and continue on like nothing happened.

Again, this comes down to the same thing time and time again - people think it's cool to own a truck. And I definitely think it would be cool to own a truck if I could make enough money to make it worth doing, which I can't. I can make the same or more as a company driver so logically that's the only real option that makes sense to me.

I have been driving for 16 mo and I know I do not want to work for someone the rest of my life. I am a 24 yr Army Infantryman and I can motivate myself for the task. I do not need dispatch telling me " stay, sit or go." If anyone need that , then be a company driver. However, if you want to O/O, you have to be disciplined with your spending, speed/driving habits, time with love ones and veh maintenance and compliant with FMCSA. One can be a successful O/O if disciplined.

Ok, I was never in the military but I know this from experience - it takes a lot more than discipline to be a successful business owner. A lot more.

I'm not pretending I know much about the military, but think about the hardest working, most disciplined Grunts you knew. Would they all make great officers? Hell no. Being a great officer and making big decisions that affect entire battlefields and the lives of dozens or hundreds of men takes a ton of experience, savvy, intelligence, nerve, and most importantly the ability to formulate great strategies that can work even when the future is almost totally unknowable.

Being a successful business owner means not only putting in more hours than any normal human would ever consider, it means putting in productive hours formulating strategies, managing finances, and handling hundreds of little details every day.

You can't simply work hard enough to be successful. You have to be able to work smart enough. And quite honestly, most people don't have what it takes to be successful business owners. It's not just about pinching pennies or putting in 100 hours a week. It goes way beyond that.

Allow me to say that I am still a trainee and as such are virtually totally ignorant regarding this subject, but I will comment anyway.

We'll allow it. Listen, basically what you've said is "Both sides of the argument make sense to me right now" and that's because you haven't dug into this topic deeply enough yet. Almost everything makes sense on the surface. You have to dig down deep into the details to find out the truth.

I'll give you a hint, though. The people on one side of this argument have a financial incentive and possibly an ego-driven incentive to convince you they're right. The people on the other side of this argument are telling you the truth for your own sake. It's up to you to figure out which side is which.

Greetings! Thank you for the interesting information. Would being an owner operator be viable in a case where a spouse has a good income and large tax breaks are needed more so than a large income? Other scenarios where it makes sense? Would appreciate any input. Thank you

I'm afraid that situation doesn't exist in the world!

You don't want to start a capital-intensive business so you can have tax breaks to offset a wonderful income. In fact, my accountant even told me the first time we met that you never want to do anything just to get tax write offs. You do things that make sense financially for yourself and you try your best to structure them in such a way that they are tax efficient.

If you're one of the fortunate ones who agonizes over how much you're paying in taxes, find ways to restructure the things you're currently doing with your life so they're more tax efficient. Once everything is as tax efficient as you can make it then just be happy you're making so much money that you're paying a lot of taxes.

The owner ops deduct everything when it comes to taxes..... The tax breaks are incredible ....

Remember, tax breaks are not gifts from the Government. Tax breaks are your expenses deducted from your income. You don't get to make the money and then keep the money without paying taxes on it. You either make money without having many expenses, which means high profits and high taxes, or you spend most of the money you're making, which means low profits and low taxes.

If you own a business and yet you're only making a worker's wages for the job you're doing then you're failing as a business owner.

This is the part, where some will have to agree to disagree, and the emotional responses start to come into play.

Personally, I agree with you, to a point. I owned 2 restaurants, one success, and one failure. The main reasons I sold the first one, is I was tired of not having a life, and making too little money, after overhead expenses, and I moved, but the reason for the move was in direct relation to issues 1 and 2.

However, If a person is doing something they love, and can pay their bills, and provide for their family, than they are a successful business owner. There is no set standard, or anything that truly defines what success is, only our individual opinions, and life philosophies. I may or may not venture into that vast wasteland that is o/o, I don't know. But I am thankful for the information on this site, because if I do, and that is a big IF, at this point, I will know exactly what to expect.

My number one reason for never becoming an O/O or L/O is the cost of repairs. I have a fairly new company truck, that before I fully took possession of needed over $1000 in an inspection and four new batteries. After a week of driving it just spent four days in the shop getting a list of things fixed. I can't even begin to imagine that cost. While the company was fixing my truck they put me up in a hotel for the two days my truck was at the dealer and I couldn't sleep in it. They washed it for me and put custom lettering on the door. And they paid me $75 per day while I sat around. As an O/O I would have had to pay a few thousand dollars for that, not make money for the days the truck was in the shop and still have to pay all my bills. I win. Oh yeah they also pay for my fuel and DEF. Plus they made two extra keys, gave me gladhand seals, fuses, oil coolant and windshield washer fluid. How I feel,

Cornelius wrote:

The owner ops deduct everything when it comes to taxes..... The tax breaks are incredible .... having to look at their financials for insurance purposes, I have seen small companies with 8 mil in revenue that deducted the hell out of down to 500k lol

8 million in annual revenue is not being generated by one truck, more like 25-30. Regardless they still have an operating ratio of between 95-97% and I'll bet there is an office staff running the company. A one man owner usually does not have that luxury.

Single operators can indeed deduct lots of things...but it still doesn't change the basic economics of the trucking business or lack of economies of scale for an individual.

I like many here know several L/Os that loath the day they signed the lease. Others, the good ones make a little more than me with a lot more work, liability and responsibility.

And the freedom thing...? Delusional; we all basically work for the government, the insurance companies, and the consumers of the freight we haul.

Old School offers incredibly valuable advice at zero cost to the reader. He has no reason for bias or monetary gain for his position on this. Objectivity in trucking is priceless. Nuff said...

I have been driving for 16 mo and I know I do not want to work for someone the rest of my life. I am a 24 yr Army Infantryman and I can motivate myself for the task. I do not need dispatch telling me " stay, sit or go." If anyone need that , then be a company driver. However, if you want to O/O, you have to be disciplined with your spending, speed/driving habits, time with love ones and veh maintenance and complaint with FMCSA. One can be a successful O/O if disciplined.

Keep telling yourself that and you may make it, or just be another sad story. Your still at the whim of a broker, having him/her find loads for you

That being said, EVERYONE I've spoken to at prime, specifically lease drivers, all UNINAMIOUSLY say I should go lease. You do the exact job a company driver does and make (insert figures ranging from $1,500- $3,000 more per week).

It would be foolish of me to dismiss your opinion on this subject, however it would be equally foolish for me to dismiss descriptions of their personal experience. I have been told they are "walk away" leases so you can return the keys with no penalty, and they receive a bonus at completion of a 2 year lease ranging from 13-23k (low being solo driver, high being a TNT trainer getting "team" miles.

Funny, I remember having those same conversations my first year at Prime. And thinking similar thoughts as you're thinking. And leasing a truck, doing well for about five months, then slowly starving the last four months till I got out.

The "walk away" part is not risk free. Prime holds your last settlement or two until the final reconciliation of the lease is completed. This "can take up to" 45 days, and unsurprisingly invariably takes exactly that long.

So, you look at your balance in the performance bond line (mine was at $1500, which means I had finished getting that in place) and your tire fund (mine was at $3000, and all six tires were eight months old with about 85,000 miles on them), and your inspection went off without a hitch so there are no final damages. You think, Can't wait to get my check for $4500! Then you get a bill for $300. Wtf!?

That's what a "walk away" lease looks like in practice. Just FYI.

And yes, some of that was for tire wear, but considering they were at about 40% wear (I measured the tread before the inspection, and it matched the inspection report), and the entire set cost $5000, that's only $2000. Where did the other $2800 go? Good luck getting a straight answer to that.

I would never lease a truck. I might buy one if I had the right circumstances, but realistically at my age I wouldn't do that either since the money required would be better invested in a retirement plan.