Actual Annual Lease Op Numbers

Topic 25019 | Page 4

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Bruce K.'s Comment
member avatar

Absolutely correct on the deductions. Example: Last year I was self employed in construction most of the year. I just found out that I owe $5,400 in Federal taxes, due April 15. Now if I had known this in December, could I have gone out an bought a new piece of equipment for $5,400 and zeroed out my taxes? No way.

Since I'm in the 20% tax bracket, I would have had to make a $27,000 (5400 X 5) completely deductible expenditure to zero out my taxes.

So to simplify things, if you spend a dollar on your truck, you may only get a 15 or 20 cent reduction in your tax bill.

I hope this makes sense.

Lou's Comment
member avatar

I'm just curious, are these numbers specific to Prime Lease Ops? I do agree that leasing is not the best idea for both a new driver or even a veteran one. A $4K a month truck payment is just insane to be honest. However, I don't understand why one shouldn't become an O/O by purchasing a truck new or used. If you do your research and know your numbers than I think it can be very profitable. I'm not suggesting to go out and purchase a truck as a new driver. As Rainy pointed out, a new driver needs to learn the industry, manager his/her truck, create a rapport with their dispatcher , etc... first but after a year or more I think it's very possible to be an O/O and be successful at it.

Dispatcher:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.
Old School's Comment
member avatar
If you do your research and know your numbers than I think it can be very profitable.

Since you made the statement, how about sharing with us how you figure this? The biggest players in this commodities business are showing profits in the 3 - 5% range. During really good times maybe up to 7%. How do you propose a one truck operation can out perform a huge operation that has great leverage in it's purchasing power?

OWI:

Operating While Intoxicated

Rainy 's Comment
member avatar

I'm just curious, are these numbers specific to Prime Lease Ops? I do agree that leasing is not the best idea for both a new driver or even a veteran one. A $4K a month truck payment is just insane to be honest. However, I don't understand why one shouldn't become an O/O by purchasing a truck new or used. If you do your research and know your numbers than I think it can be very profitable. I'm not suggesting to go out and purchase a truck as a new driver. As Rainy pointed out, a new driver needs to learn the industry, manager his/her truck, create a rapport with their dispatcher , etc... first but after a year or more I think it's very possible to be an O/O and be successful at it.

Many of the larger carriers have similar expenses and fees. These are drivers from Prime who showed me their settlements because we know each other on some level.

For OO, you need to research high insurance and high loan interest as a new driver or first time owner. Research the repair bills.

I ha e a friend who bough a used Volvo for $60k and paid $14k for an extended warranty. Her credit wasnt excellent, so she had to put down more of a down payment. She couldnt afford the insurance so leased onto a large carrier. The first year she had $35k in repairs, the second year $25k. None of it was covered under the extended warranty. All the while, it is depreciating and gaining more and more miles.

Yes she gets a decent price per mile, runs less than many OO i know...but in the end, she is selling personal belongings and living pay check to paycheck.

I have never done that as a company driver. I ha e even loaned LO and OOs money. if they were so rich, why would a company driver need to do that for them?

People have different ideas of success.

Dispatcher:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.

OOS:

When a violation by either a driver or company is confirmed, an out-of-service order removes either the driver or the vehicle from the roadway until the violation is corrected.

Robert B. (The Dragon) ye's Comment
member avatar

Robert (Dragon), or Sid V if you dont mind sharing, how do you handle your quarterly tax payments? I'm not real knowledgable about taxes but just curious how you estimate what your income would be for the quarter as i believe you're supposed to pay taxes at the beginning of the quarter. Do you pay the quarterly taxes based on the income or break it down to what you would actually owe after the deductions you take?

Myself, I put aside 23% at the time and sent that in based on an estimate of projected revenue before the deductions. At the end of the year was when all the deductions were figured in and as Old School mentioned, your CPA is going to use any available deduction you're eligible for, if that's what you want them to do. It's a numbers game that people are playing but the reality is still there that unless you're someone working with specialty commodities who has been in the game for a long time, you're better off letting someone else foot the bill. I never went into the lease program intending to buy a truck, I did it so that if someone asked, I could give a legitimate account on how it works and just how risky it can be.

The saying in trucking is very true, if you want to be a millionaire, start with 2 million. It wasn't always this way but those days are long gone.

HOS:

Hours Of Service

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

Rainy thank you for the example you provided about your friend. I understand there is risks with becoming a lease operator or owner operator , purchasing a used truck versus a new one, high insurance costs and high loan rates plus more. Some have better results than others, I understand that as well. It is a risk that could end up badly or can be rewarding.

Old School, If a driver does their research and knows what it will cost to run his/her own truck and still feels like they can profit then why not do it? That's all I'm trying to say here. To me it's not about a one truck operation outperforming a huge operation. It's what makes that driver happy, successful (in their view of success), enjoying life whether as a company driver or an O/O. To some there's more to it than just the money.

I'm not trying to ruffle any feathers here. I know the majority of people on here lean towards company driver and that's perfectly fine, it's their choice. I just don't understand why so many people are so against O/O, not all lease and/or owner ops fail at the business. Some may bring home the same, more or less than a company driver but in the end if they're happy, content, successful in their eyes (as Rainy stated, success is different to many people) then that's a win.

I've been researching the trucking industry for some time now as I'm extremely interested in it. I cannot go into it now due to my current location but have every intention of doing so once I return to the US. I will start as a company driver because I feel that is the best route for me for the various reasons so many on here have stated. Will I look into O/O at some point, maybe after a year or more in the industry. It's not all about the money for me though so there's that. Success to me is doing something I truly love doing and not going broke doing it.

Thank you all for listening and giving examples and advise. I appreciate it.

Owner Operator:

An owner-operator is a driver who either owns or leases the truck they are driving. A self-employed driver.

Robert B. (The Dragon) ye's Comment
member avatar

I'm just curious, are these numbers specific to Prime Lease Ops? I do agree that leasing is not the best idea for both a new driver or even a veteran one. A $4K a month truck payment is just insane to be honest. However, I don't understand why one shouldn't become an O/O by purchasing a truck new or used. If you do your research and know your numbers than I think it can be very profitable. I'm not suggesting to go out and purchase a truck as a new driver. As Rainy pointed out, a new driver needs to learn the industry, manager his/her truck, create a rapport with their dispatcher , etc... first but after a year or more I think it's very possible to be an O/O and be successful at it.

Want to make money as am owner OP? I'll give you a very real number that you need to shoot for every week to cover all expenses, medical insurance, taxes and money set aside for catastrophic repairs. That number is 10k a week in gross revenue. That's half a million a year to that truck for a guy running one brand new truck with a brand new trailer. With the rates that the larger carriers pay, you'll be lucky to average $2 a mile every mile to the truck meaning you'd have to run 5k miles a week. If you can see where I'm going with this, you'll be married to that truck with no time for anything else.

Dispatcher:

Dispatcher, Fleet Manager, Driver Manager

The primary person a driver communicates with at his/her company. A dispatcher can play many roles, depending on the company's structure. Dispatchers may assign freight, file requests for home time, relay messages between the driver and management, inform customer service of any delays, change appointment times, and report information to the load planners.
Old School's Comment
member avatar
I'm not trying to ruffle any feathers here.

You're not ruffling any feathers. But your making statements with no facts to support them. We work with facts here, not feel good emotion. A lot of people read these conversations, so we point out things for them to realize when a baseless claim might encourage someone into making a huge financial mistake. I've owned a good many big trucks, and been a business owner many years. I make great money as a company driver, and really love the freedom I have in this career.

You defined success this way...

Success to me is doing something I truly love doing and not going broke doing it.

That's a perfect reason for being a good solid company driver. Everybody tends to think their trucking career should progress into owning a big truck, but it's just not a very practical approach.

The Natural Progression Of A Truck Driver's Career

Rainy 's Comment
member avatar

Trucking entails a lifestyle that most cannot handle. All of the research in the world cannot prepare you. It is hard enough making it the first year without taking on the unneccesary risks.

You want to own a truck, fine. Learn to drive one, maintain one, and run one first.

People who have never stepped foot in a truck have unrealistic expectations about the lifestyle, job, and money. That is what this forum is all about, setting the record straight for newbies.

Lou's Comment
member avatar

Rainy, I totally agree with you and thank you.

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