Called An Independant Contractor But I Have My Doubts...

I drive a straight expediter truck that is owned by the company I am under contract with. They pay all costs relating to keeping the truck running and reimburse me for things I buy such as oil, coolant, bulbs, etc. I am not told what routes to take or where to fuel or anything like that. I am offered the load (don't really think I'd last if I ever turned one down for anything other than not having the hours) and other than having to call in upon arrival for load, when loaded, arrival at destination, unloaded, and where I am shutting down for the night (so they know where to be looking for loads for me), I am pretty much left to get where I need to be in my own time and way. I am paid a percentage of each run less 10% for worker's comp insurance.

I started thinking about what my liability would be in an accident. I don't carry anything other than my own personal vehicle insurance which won't do anything for my work driving and I am not set up as a business entity. I suspect that if I were in an accident in the truck that it would probably be determined that I was actually an employee but I don't know that for a fact. I am kicking around the idea of forming either an LLC or an S Corp (leaning towards the S Corp) and having them pay me through the business entity in order to provide a separation and protect my personal assets. It wouldn't be the worst thing in the world to form the S Corp anyway since I'm planning on buying my own truck and running as an owner-operator next summer.

Any thoughts or comments would be appreciated.

Jeff

Paying drivers on 1099/;Independent Contractor is a common abuse of the system. It is actually illegal but happens a lot. "Workers comp insurance" means you are an employee. It is possible they are deducting another kind of insurance on your behalf. I had one in one job (as an independent contractor) where the insurance was called "Occupational accident insurance" and covered any on-the-job injury.

Also on your settlements (this is an Independent contractor or O/O term) is if they deduct any taxes, you are an employee.

Here is an authoritative discussion on the Trucking Truth forum a few years ago: Employee Vs Independent Contractor

You can check out the IRS site: Independent Contractor (Self-Employed) or Employee?

Or download this PDF file: IRS 20 Factor Test – Independent Contractor or Employee?

In my situation, I delivered new trucks from the factory (Volvo, Mack, ProStar) to customers. I wasn't an owner but I was an independent contractor. The company paid me enough to cover all road expenses from fuel to permits, but not tolls or hotel expenses. All these actually came from my pocket as far as IRS & business expenses was concerned.

Any thoughts or comments would be appreciated.

Jeff, I was a long time business owner before getting into trucking. I tried every which way to put a viable business plan together so I could run as an Owner/Operator. Guess what? I couldn't formulate a plan that even looked like it would work on paper!

My comment is more of a question, and to be honest, I'm only hoping to make you think a little more seriously about this. Why is it that you are so determined to be independent?

As a company driver, my income is more than most O/O's I've talked with. If you add in the dollar amounts the company spends on my insurance, worker's comp, matching 401K dollars, and a few other perks, I am way ahead with no financial risks to me personally.

Everybody is always thinking the grass is greener someplace else. They constantly look for that golden needle in a haystack. They either want to switch to a "better" company or they want to lease or own their own truck. I'm not criticizing your desires, but I'm trying to challenge your process for improving your situation.

This whole career is performance based. We get paid for how much we can accomplish. That in itself makes the whole trucking experience extremely similar to being self employed. Anybody wanting to be more valuable in this business must make themselves more valuable by their performance. Buying trucks and having corporate protection does little or nothing toward that end. Being productive, efficient, and safe opens the door to allowing more money to flow in your direction.

I have never seen an Owner Operator's income statement that looks even close to being better than mine. Oh, I've heard the crazy talk about making 8,000 dollars a week and all the other B.S. If a person can't decipher the difference in revenue and income I find it very mocking for them to go on with me about how they are killing it out here by owning the truck. This is one tough business. The best of the best trucking companies make in the 3 - 5% profit range. Does that sound very good to you? Do you think you can outsmart the guys who've managed to make it really big in this business?

It's a commodities business. That means the guys who can do it the cheapest get the most work. Do you really want to play that way? That's the reality out here. We are in a cyclical phase right now where freight rates are dropping and insurance rates are rising. Sounds great doesn't it? Already this year we've seen some decent sized trucking companies with long histories closing their doors - they're bankrupt.

You can do really well out here as a good solid company driver. Let the guys with the deep pockets fight those bidding wars. Learn to be a Top Tier Driver and you will do very well without needing some corporate umbrella over you.