I'm Headed To Springfield Prime Fri

Topic 23500 | Page 11

Page 11 of 12 Previous Page Next Page Go To Page:
Splitter's Comment
member avatar

double-quotes-start.png

asking someone for the "adjusted gross income" from their taxes is misleading because that includes all the deductions they make such as "i bought a laptop to play training videos" etc. a smart tax man can get that $250k down to $25k for tax purposes.

double-quotes-end.png

I don't agree with that. To start with, a good tax man isn't going to commit blatant fraud. Sure, you could add a couple of items as write-offs that weren't necessarily for the business, like a phone or a computer, but realistically how much do you think you're going to write off fraudulently? Very little. Your profits aren't going to magically disappear. They're accountants, not magicians.

If you had to buy something for the business then it's a business expense. It went right back out the door, which is what happens to most of the revenues for almost any business, which is exactly our point.

Brett, I respectfully disagree. I was an independent contractor since ‘96 in NYC. The nature of the business I was in, many others followed this same practice with taxes.

Many made 6 figures but when you saw their tax exposure? My eyes popped out my head. From 6 figures to 15k-25k & only paying taxes on those figures. It’ll be crazy different now with the new laws though.

SAP:

Substance Abuse Professional

The Substance Abuse Professional (SAP) is a person who evaluates employees who have violated a DOT drug and alcohol program regulation and makes recommendations concerning education, treatment, follow-up testing, and aftercare.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Brett Aquila's Comment
member avatar
Many made 6 figures but when you saw their tax exposure? My eyes popped out my head. From 6 figures to 15k-25k & only paying taxes on those figures.

So you're saying they were just being blatantly fraudulent with their taxes? They were writing off a whole bunch of expenses that weren't related to the business or never happened in the first place? Or they were just doing cash business and not claiming it?

In trucking that's going to be extremely rare. Especially in leasing when all of your cash flow is going through a major corporation who isn't about to commit fraud to help you pay less in taxes.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Rainy D.'s Comment
member avatar

There are tons of legal loopholes, you know that. I have been researching this topic since i walked through the door at prime.

heres an example... my storage locker is $3600 per year. i cant deduct it because it isnt a business expense. i know lease ops who put the locker in the LLC name and claim it houses tires, parts, tools..etc is it fraudulent if it has some tools or parts?

My locker has tools and truck stuff in it right now. so does that make it a business expense? can the IRS prove i didnt have tires and such?

My mattress was pretty expensive and its not the one i really wanted. I ordered an $1800 mattress. i know a lease who did the same and wrote it off as a truck expense. i didnt...but others do. its on the truck and something they wouldnt buy if not for the truck.

drivers list their pets as "emotional service animals" and get the deduction for food water, pet supplies and vet bills.

Satellite TV? its used for weather reports and up to the minute road closures. thats $600 for the dome, $200 for recivers and install and $60 per month for the service...all getting written off.

Trainers are writing off meals with students as business meetings.

when a business person buys something they think "how can i use this in my business to write it off". One guy writes off shampoo and butter cause it "greases the tandem slider"

ive seen it all and heard it all. its happening every where.

Heck, Mitt Romney built an elevator in his car garage and it was deducted as home improvement.

Tandem:

Tandem Axles

A set of axles spaced close together, legally defined as more than 40 and less than 96 inches apart by the USDOT. Drivers tend to refer to the tandem axles on their trailer as just "tandems". You might hear a driver say, "I'm 400 pounds overweight on my tandems", referring to his trailer tandems, not his tractor tandems. Tractor tandems are generally just referred to as "drives" which is short for "drive axles".

Brett Aquila's Comment
member avatar

For the most part, anything you purchase for use at your job is a write-off, whether you're an employee or a business owner. Most of the things you mentioned are legal write-offs.

In the end, an expense related to running your business or doing your job is an expense. If you bought it to do your job, or help you run your business, then it should come out of your income and that means your "net income after all deductions" will usually be a pretty accurate indication of the money you're really keeping, and that's what matters in the end.

Profit is the money you get to keep because you didn't need to spend it on something to do your job or run your business. If you make a million dollars and write off $960,000 of it as expenses then you really didn't get to keep very much of it, did you? So you're really not doing that well when you think about it, are you? You're keeping $40,000 out of a million bucks. So you're making a million bucks but you're living in a dumpy little apartment driving a 14 year old minivan. Not exactly the American Dream, but you can be sure you're still telling people you're making a million bucks.

The cash you get to keep is what matters to me. Whether you write-off expenses legally or not, they're still expenses and the cash is gone. What you're left with in the end is what it's all about.

Rainy D.'s Comment
member avatar

While i was at the terminal a couple lease ops had been talking. one told the other he gets his truck washed twice a week. "Yeah, prime pays for it so.why not?"

prime pays for 2 washes a month for company drivers and nothing for lease. the trailer they pay of course. but this guy thought that since he just signed the receipt, that prime paid. he didnt realized he was getting billed in his settlement until the experienced lease guy told him.

THIS is what concerns me about new people or inexperienced people going lease right away. just like any new driver...they dont know.what they dont know.

and just like with swift...Prime is in a court battle now with "the misclassification of drivers" over lease.ops.

Terminal:

A facility where trucking companies operate out of, or their "home base" if you will. A lot of major companies have multiple terminals around the country which usually consist of the main office building, a drop lot for trailers, and sometimes a repair shop and wash facilities.

TWIC:

Transportation Worker Identification Credential

Truck drivers who regularly pick up from or deliver to the shipping ports will often be required to carry a TWIC card.

Your TWIC is a tamper-resistant biometric card which acts as both your identification in secure areas, as well as an indicator of you having passed the necessary security clearance. TWIC cards are valid for five years. The issuance of TWIC cards is overseen by the Transportation Security Administration and the Department of Homeland Security.

Grumpy Old Man's Comment
member avatar

THIS is what concerns me about new people or inexperienced people going lease right away. just like any new driver...they dont know.what they dont know.

and just like with swift...Prime is in a court battle now with "the misclassification of drivers" over lease.ops.

As for the write offs of the lockers, Satellite TV, etc., legitimately you could write off the percentage that is used for business. For instance, I write off the portion of my home and internet access, and other utilities that is used for business. But the other things like shampoo and butter will bite them in the rear if they get audited.

The independent contractor vs employee thing has been going on for years.

And you are absolutely correct about new guys. I had the same thing in computer repair. This is long, but I promise there is a point.

When I first started my business, there were online sites to sign up for work for large companies that needed a local tech. You were a contractor. Pay was decent, because at that time, the people signing up were guys with businesses that understood that taxes and expenses had to be paid from that revenue. Then the sites started recruiting like crazy, and anyone who had ever added memory to their computer started calling themselves techs and applying. I was on the advisory board for one of the sites. Their interview process for new techs had nothing to do with knowledge, just age, and legality to work in the US. There were stories of stuff being stolen from sites, one guy was a meth addict, convicted of arson (of a gas station he owned) while accepting work as a contractor, one pulled a gun on site, and one left a refrigerated machine unplugged after repairing it in a hospital and $100,000 worth of cancer drugs spoiled. The advisory board tried to tell the company that they needed to vet the contractors better, and the downward spiral of pay would come back to haunt them, but they didn't want to hear it.

These new guys would post on the forums asking questions that made it obvious they had no clue how to do the jobs they were accepting. If you accepted the jobs and called in to support with the tools you needed, your part done and just needing them to test, the engineers were amazed, and wanted you to do all their work in the future. They would tell horror stories about some of the "techs" they worked with. But accounting had different ideas, they simply wanted the lowest bidder. Eventually, the real techs bailed, and now those jobs are going at rates that there is no way to be profitable. There was always a drop in jobs available over summer break from college, and a surge when school started up in fall.

All that was to get to this: Every spring, as those "techs" had to pay their taxes, there would be a surge of work with no one to accept, and those companies would start calling the real techs, offering real money again. Those techs would be on the forums asking questions about taxes, complaining they had huge tax bills, their vehicles were dying from all the mileage (that they weren't charging for) and they couldn't afford to replace or repair, and so on.

They saw the checks for revenue, and thought they were getting rich. After all, if you were working for $7 an hour, and suddenly you are offered $25 an hour, that is a huge jump. But they had no idea what went into running a successful business, and there is a constant turnover in those contractors. The ones that even thought about taxes tried to use the percentages they were paying as an employee, and applying it to their new "business". Most didn't even think they had to pay taxes, they thought they were employees. They had no idea that they would owe money for taxes at the end of the year, let alone be responsible for the employer's portion of those taxes.

HOS:

Hours Of Service

HOS refers to the logbook hours of service regulations.
Brett Aquila's Comment
member avatar

Grumpy Old Man, that sounds very much like what is happening with leasing in the trucking business. These companies have made it so that almost anyone can lease a truck from them, often times with no prior business experience and sometimes without driving experience. They have prepackaged deals ready to go. You just sign on the dotted line, pick the truck you want from the lot, and bam, you're the big boss man.

It's unfortunate for most people who sign up for these lease programs because it is painfully obvious they have very little knowledge or experience with running a business. In the best of circumstances you'll make the same as a company driver and all of the extra work and risk results in an inflated sense of pride and vanity. In the worst of circumstances these people lose quite a bit of money compared with what they would have made as a company driver because no one is there to pull on the reigns and guide them on how to run a business properly.

I mean, in the end it's not the end of the world either way. No one is going to go a million dollars in debt or wind up in prison for fraud because they became desperate and created a ponzi scheme or anything like that. What's essentially going to happen to most people is they're going to make far less money than they would have as a company driver and they'll learn a little bit about how to run a business. So in that sense it's no worse than paying to go to school. It's an expensive lesson in the realities of running a trucking business.

DOT:

Department Of Transportation

A department of the federal executive branch responsible for the national highways and for railroad and airline safety. It also manages Amtrak, the national railroad system, and the Coast Guard.

State and Federal DOT Officers are responsible for commercial vehicle enforcement. "The truck police" you could call them.

G-Town's Comment
member avatar

This content of this thread has been enthusiastically debated since I joined this forum over three years ago.

It seems to get new life every so often when new members come and go. I for one have no interest in lease operation. The leasing agreements are skewed in favor of the companies; could be Prime, Swift or Schneider. Matters not. Face the fact that leases increase their profits, period. Where do you think the increased profit comes from? It comes from the driver.

Although I do not and never will advocate L/O, it’s absolutely a colossal mistake for a neophyte driver and/or a person with zero experience running their own business. And for the latest crop of newbs advocating L/O; has it occurred to either of you that if this was the best path to success that every experienced OTR driver on this forum would be under a leasing contract? C’mon guys, listen to what Old School and Brett are telling you. They have experience, listen to them!

That said, if the very largest and most successful companies only manage to squeeze single digit profit margins, how can any of you expect to do much better? The money and cost structure isn’t there to sustain a six figure income. If you believe otherwise you are naive and myopic in your logic.

If you apply the average profit margin of 3-4%, then out of the revenue generated by the truck, pay yourself a CPM rate no more than 3-4% above the company driver rate. Simple. Start there and bank the rest, you’ll need it.

Revenue and net pay to the drivers pocket should never be confused or considered equal. I know numerous successful business owners. NONE of them pay themselves a salary equal to net profit. It’s a recipe for certain financial failure.

OTR:

Over The Road

OTR driving normally means you'll be hauling freight to various customers throughout your company's hauling region. It often entails being gone from home for two to three weeks at a time.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Grumpy Old Man's Comment
member avatar

The leasing agreements are skewed in favor of the companies; could be Prime, Swift or Schneider. Matters not. Face the fact that leases increase their profits, period. Where do you think the increased profit comes from? It comes from the driver.

If you apply the average profit margin of 3-4%, then out of the revenue generated by the truck, pay yourself a CPM rate no more than 3-4% above the company driver rate. Simple. Start there and bank the rest, you’ll need it.

Revenue and net pay to the drivers pocket should never be confused or considered equal. I know numerous successful business owners. NONE of them pay themselves a salary equal to net profit. It’s a recipe for certain financial failure.

If it did not benefit the company, they would not offer it. Period. No company is in business to give away profit to the employees, no matter how great the company is. The shareholder would revolt if it is a public company, and if it is private, eventually they would go under.

The load pays what the load pays. I don't need to be a trucker to understand that. So where would the profit from the company come from? They take their percentage for the load off the top, and then they save on the employee's costs they would have to pay if they had an employee driving that load. It isn't rocket science. It is a fact. An employee costs around 20 to 30 percent above their salary or wages, depending on the state, from taxes, insurance, and benefits. They save ALL of that for a lease operator or O/O.

3 to 4 percent is an average profit for business. Some businesses hit the jackpot and make more, mainly if they have little competition or a high demand product, some make less. Any business owner should be banking every penny earned, spend as little as possible, and pay themselves as little as possible as a paycheck. As time and profitability grows and you establish a baseline, you can increase that check, but the business needs operating capital to survive.

I pay myself way less as an owner than I ever made as an employee, and left the rest in the business to grow the business. If I had to order $10,000 worth of equipment to do a job, and didn't have the cash, I would have to turn down the job. If you, as an O/O need to replace a tranny, or rebuild an engine and don't have the cash, you will be out of business. Revenue is not salary or a paycheck. Not if you wish to survive long term.

The original poster still hasn't explained why he wouldn't renew the lease at the end. I would love to hear that answer.

CPM:

Cents Per Mile

Drivers are often paid by the mile and it's given in cents per mile, or cpm.

Brett Aquila's Comment
member avatar
If it did not benefit the company, they would not offer it. Period. No company is in business to give away profit to the employees, no matter how great the company is.

That is one of the unanswerable questions we always ask people about leasing a truck and of course no one even tries to answer it. Why would the company offer a lease option if they were making more money with their company trucks? They're not going to offer an option that takes money out of their pocket and puts it into someone else's.

The original poster still hasn't explained why he wouldn't renew the lease at the end. I would love to hear that answer.

This is the "loophole theory" and almost everyone who buys or leases a truck thinks they've found one. They always believe they've figured out this magical formula where they're going to take the company's offer and sign the company's contract but use this magical loophole to outsmart the company at their own game, steal an extra share of the profits right out from under the company's nose, and then run off with this extra bag of cash laughing all the way to the bank.

Page 11 of 12 Previous Page Next Page Go To Page:

New Reply:

New! Check out our help videos for a better understanding of our forum features

Bold
Italic
Underline
Quote
Photo
Link
Smiley
Links On TruckingTruth


example: TruckingTruth Homepage



example: https://www.truckingtruth.com
Submit
Cancel
Upload New Photo
Please enter a caption of one sentence or less:

Click on any of the buttons below to insert a link to that section of TruckingTruth:

Getting Started In Trucking High Road Training Program Company-Sponsored Training Programs Apply For Company-Sponsored Training Truck Driver's Career Guide Choosing A School Choosing A Company Truck Driving Schools Truck Driving Jobs Apply For Truck Driving Jobs DOT Physical Drug Testing Items To Pack Pre-Hire Letters CDL Practice Tests Trucking Company Reviews Brett's Book Leasing A Truck Pre-Trip Inspection Learn The Logbook Rules Sleep Apnea
Done
Done

0 characters so far - 5,500 maximum allowed.
Submit Preview

Preview:

Submit
Cancel

Join Us!

We have an awesome set of tools that will help you understand the trucking industry and prepare for a great start to your trucking career. Not only that, but everything we offer here at TruckingTruth is 100% free - no strings attached! Sign up now and get instant access to our member's section:
High Road Training Program Logo
  • The High Road Training Program
  • The High Road Article Series
  • The Friendliest Trucker's Forum Ever!
  • Email Updates When New Articles Are Posted

Apply For Paid CDL Training Through TruckingTruth

Did you know you can fill out one quick form here on TruckingTruth and apply to several companies at once for paid CDL training? Seriously! The application only takes one minute. You will speak with recruiters today. There is no obligation whatsoever. Learn more and apply here:

Apply For Paid CDL Training

About Us

TruckingTruth was founded by Brett Aquila (that's me!), a 15 year truck driving veteran, in January 2007. After 15 years on the road I wanted to help people understand the trucking industry and everything that came with the career and lifestyle of an over the road trucker. We'll help you make the right choices and prepare for a great start to your trucking career.

Read More

Becoming A Truck Driver

Becoming A Truck Driver is a dream we've all pondered at some point in our lives. We've all wondered if the adventure and challenges of life on the open road would suit us better than the ordinary day to day lives we've always known. At TruckingTruth we'll help you decide if trucking is right for you and help you get your career off to a great start.

Learn More