Your Opinion On CPM Vs.% Of Each Load.

So I've gotten a offer to drive from my Father in law. He has a friend who owns 7 trucks and He's offered to take me on once my father in law has trained me. So I guess it's a bonus that I'll know my trainer on the road. However, I'm confused as to whether or not how I'm going to be paid is better or worse than the average. This gentleman whose offered to hire me has told me that he'll pay me 39% of each load I take. I can work whenever I want and take a day off whenever I want. The loads I'd be taking are all within 400 miles of my home so most often I'll be home nightly which is great since I have a newborn at home.

For example I went this weekend with my Father in law on a 2 trips. First was a pick up at the JB Hunt yard in Chicago dropping off at Brownsburg, IN. then grabbing an empty and heading to Danville, KY. where we drop and hook and head back to Chicago. My father in law as an O/O got 850$ for the Brownsburg trip and another 1150$ for the Danville trip. That would have gotten me 331.50 for Brownsburg and 448 for Danville 779$ in a 24 hour period sounds great but, I'm pretty sure I'd have to pocket some of that for taxes at the end of the year I think it's 20%... The math gets confusing for me.

Anyway... Any opinion on CPM vs. Percent of Load?

Any thoughts?

The main reason percentage pay scares me is what is the load worth. What's 23% of $100? $23 dollars.

Unless you could actually see exactly what the load is being paid for the company to haul it there really is no way to know if you really are getting what you are supposed to. Most companies dislike divulging their financial paperwork to an employee.

Also you have to ask is that 23% of the whole price of the load or is it 23% after expenses are taken out and you pay comes out of what left. Those are two very different numbers.

Eric, here's my two cents on this whole discussion.

39% is a pretty good amount to get paid if you are not having to cover any of the expenses of the truck. But I say that with a caveat, and that is that there were several things that you mentioned in your post that indicate that you will be considered as an independent contractor and not an employee. Things like:

I can work whenever I want and take a day off whenever I want.

I mean, that is almost a direct quote out of the IRS definition of what constitutes an independent contractor. Then you mentioned about having to hold back some money for taxes - I'm assuming someone told you that, and if so then they are not withholding your tax dollars from your check, which also indicates and independent contractor status.

There is nothing wrong with being an independent contractor, but you just need to understand that you will not receive a W-2 form at the end of the year, you will get a 1099, and that form tells the IRS exactly what they paid you over the year. You will have to come up with the money to pay them what you owe, and more than likely you will need to pay them an estimated amount every quarter, not just at the end of the year. It's not unusual for independent contractors to get themselves into tax trouble, you would need to be very careful that you are keeping tabs on everything pretty well. Your statement that the math gets confusing for you says to me that you might not be cut-out for this type of payment arrangement.

It does sound like an ideal arrangement for you in the terms that you are just starting out raising a family, but the things I mentioned above are things that you should probably discuss with your wife and make sure that the two of you are on the same page with all this.

I think you could make some pretty decent money if you are working for an honest outfit with the terms you mentioned, but you really should do a little research on self-employment taxes to see if you think you can handle the paper work, or decide if you are willing to pay an independent book keeping service or accountant to handle it for you.

One more thing. I was an employer for thirty years, and I tried all different types of business strategies, but I will tell you that my experience was that the self-employment tax was one of the highest rates I ever had to pay. Even when I made myself an employee of my own corporation and paid taxes on the money I made twice (once for my personal income and once for my corporate income) I still came out ahead over taking the hit of the self-employment tax rate.

Just a few things to consider that you might not have thought of.