Payroll Taxes

Hello everyone,

I'm fairly new to this so greetings to everyone. I have a question with payroll taxes and cost per mile. lets say I want to hire a driver and pay him .39 cents a mile if I add all the taxes and workers comp it brings it up to roughly. 53 cents per mile. Ive seen that its very high increase. and that my total cost per mile would go up to $1.86 while the national average is at $1.35. how do other companies with drivers manage taxes and stay competitive? I heard that companies hand out 1099 to drivers, my last employer paid me by load and he deduct the taxes from the check.

If a driver only works for you and you control his/her schedule then you CANNOT hand them a 1099. Many companies are shut down for this reason of avoiding taxes.

As for your costs being higher, I am just assuming that they are not accounting for things like insurance, plates, maintenance etc.

I believe that the $1.35 figure is just driver labor and fuel for the truck. Because that is how my numbers come out.

The reason is that you can not figure an accurate cost per mile for these as the miles vary from truck to truck. Those are the fixed costs of operation. The per mile rate is different for each truck.

The only drivers that are issued a 1099 are lease operators and contract drivers. Let me be very clear about this....if you hire a driver he is YOUR employee and you have to pay his workman's comp and social security along with withholding his taxes which are set by his home state. If you plan on doing anything else then you are asking for big trouble.

To answer your questions how people stay competitive....it's a matter of numbers. More trucks means you can spread the expenses out over the entire fleet. One truck operation you can not do that. If you have only one truck the the revenue you make will go two places.....the drivers pocket and into the company account to run and operate the truck.

Thanks for the insight fellas,

Im not doing anything out of the ordinary i believe, what baffled me was owner operators still low balling charging about $1.32 cpm. Thats what got me thinking if I was doing anything wrong. With fuel prices here around the $4.25 range it startled me how they manage to survive. Thanks again I hope I can bring something to the table as well at your questions..