A pro tip: consider putting a refrigerator and a microwave in your sleeper; these can really help save you a lot of money over the long term. Owner-operators can deduct some portion of the price of meals and lodgings while they're on the roadand through the end of 2022, the IRS allows drivers to deduct 100% of meal costs, up to $69 per day. Percent of load pay can be volatile, making it hard to plan finances. A breakdown of the most important factors to consider when buying a new truck, including the best truck for owner operators. There are two basic types of insurance for owner-operators to consider: vehicle insurance and health insurance. Take the time to understand the various types of coverage and make an informed decision as to what you need. Take home pay after all expenses as an owner operator. Assuming you run 100,000 in a year, you should plan for about $74,500 in annual expenses. Tanker owner-operators Owner-operators who haul tanker freight and do business with Schneider are averaging $210,000 in annual revenue. Owner-operators receive a tax deduction per diem that allows them to deduct a portion of the drivers meals from their taxes. Although owner-operator trucking company expenses may be an important part of running your business, that doesnt mean you shouldnt try to cut them down. Its just easier and more efficient to concentrate on lowering costs than it is to focus on adding business. Being an independent owner-operator or a small commercial truck fleet owner is a small profit margin business. These costs are also included in the per diem rate for truckers. With recourse factoring, the factoring service will make a reasonable attempt to collect on the invoice. To ensure you wont be caught by surprise by maintenance bills, overestimate the amount you will need to cover them and set it aside in a separate account for later maintenance. Weather or safety concerns may require you to sleep in a hotel. Recently companies seem to be banking drivers in anticipation of needing replacements and trainer wait times may be increasing. This site is owned and operated by BSCDDC. I built this site to hopefully help other drivers with some of the things I struggled both as I started driving and still encounter while on the road. HaulHound, Inc. All rights reserved. Lodging costs can add up and become a significant expense for drivers on longer routes. It means that for every $20 in gross revenue you make, you are only making $1 in profit. Keep good documentation of all invoices and receipts, as well as mileage and billings. Factoring is a service that helps control your cash flow. But this varies widely depending on experience, the type of loads a driver will specialize in and carry, and how much time they spend on the road. Contact your insurance provider for more information. ), The cost of the truck (which might include monthly payments), Money saved on not having to register as a carrier and other permitting, Lower overhead due to discounts on fuel, tires, and other expenses, A steady income since you dont have to wait for invoices to be paid (which can sometimes take a long time). Be sure to think through what kind of business youll be doing and all the costs you might run into. This is one of the most common questions for considering a change from the company driver to an owner-operator business. City Annual Salary . But that's calculated before the essential owner-operator expenses that are a necessary part of running a successful business. But it can be well worth paying the fee to ensure that you get paid quickly. Copyright 20102022 Rigbooks, LLC. Using a digital freight matching service can help you find instantly find nearby loads to reduce deadhead expenses. Many of them are free, but often the pro versions are worth the fee, however they can add up. Similarly, always go for quality part replacements, even if they seem expensive, to avoid further expenses in the future. 3.5 million truckers in the United States, 15.3% self-employment tax (12.4% for Social Security and 2.9% for Medicare) for owner-operators. In sum, an owner operator who runs 100,000 miles annually can expect to make about $125,500 after expenses. According to Indeed, an independent truck driver's gross pay averages $183,000 per year, but expenses can run over 70% percent. Using all this information you can estimate your cost per mile. For example, the per diem rate from October 10, 2022, to September 30, 2022, was 80% of $69 daily, in the United States. Want examples? Monthly Miles: 8800 Annual Miles: 105600 Performance Assumptions Recalculate Fixed Costs Per Month, unless otherwise specified Variable Costs Recalculate Read This Next Heres what you need to know to accurately calculate your owner-operator income and expenses. Every state has vehicle inspections, registrations and testing as well as your drivers license or any renewal fees. . Make sure you save all those receipts for any qualifying tax deductions. Leaving him with a total of $0.5 per mile of profit. Consider investing in a small refrigerator and a microwave for your truck rather than exclusively dining out. Also look for opportunities to use auto pay and paperless billing to save on headaches and missed due dates. And there are probably a few things that you didnt even realize you needed to cover. But the less coverage you have, the more risk you are assuming. If not, then they're not working much throughout the year for whatever reason. With the average trucker salary being $40,000, this is the second-biggest owner operator expense there is. Weve been around since 2010. This means you get a good cut from high-paying loads, but low-paying loads hit you, too. Use a professional tax preparer (that you budgeted for earlier) to make sure that you get every possible deduction and your returns are put together properly.if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[250,250],'bigrighq_com-leader-1','ezslot_9',121,'0','0'])};__ez_fad_position('div-gpt-ad-bigrighq_com-leader-1-0'); Dont forget that you need to get paid. My total expense is $3500 a month. Search active loads by location and equipment type. Understanding what costs vary and which stay the same for you helps you get a better grasp on what you can do to improve your take-home revenue. Part 1 of a 3 part series. Are you ready to find high-paying loads and get paid faster? Although you may not be able to significantly reduce your fuel expenses, you can shave off a fraction by finding your engines sweet spot. This is the RPM at which your engine runs most efficiently. Improving trucking fuel efficiency means a huge increase in your take-home pay. Your average independent owner-operator works at a 5% profit marginnot including salary. You can break down all costs intofixed costsandvariable costs. Eating restaurant and diner meals on the road can really add up in a surprising way. And dont forget the cost of washing and cleaning supplies if youre going to keep your truck spotless. Your fixed expenses, like truck payments, insurance, and permits are inescapable and largely unchangeable. Online directories may charge fees for listings as well. Reply. To calculate how much you will be spending on fuel, consider the following calculation: Total Fuel Cost = Fuel cost per gallon / average MPG (your trucks average cost per mile) x total miles traveled. Cost overruns are a fact of life for small businesses. Some insurance premiums may also be higher, depending on the type of coverage thats selected. Expenses for provisions should also be considered, especially for long-distance truckers that dine out. BUT that's not the whole story. The highest earning van owner-operators, which are often team owner-operators, are exceeding $7,500 on a weekly basis. This article will help you better understand how the Income Estimator works. For a small monthly fee, youll be able to automate most of your processing, from single-click invoices to detailed customer agreements to International Fuel Tax Agreement (IFTA) reporting. This cost will vary depending on the size of your operation. Your truck payment may be the largest of your fixed owner-operator monthly expenses. Now lets look at a breakdown of the actual costs. if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[250,250],'bigrighq_com-large-leaderboard-2','ezslot_3',120,'0','0'])};__ez_fad_position('div-gpt-ad-bigrighq_com-large-leaderboard-2-0');If you are using software, it is highly advised that you budget for licenses and subscriptions verses downloading pirated versions. You need to be able to prove most expenses, such as by keeping your receipts, and not everything is fully deductible. Appreciate you taking the time to visit. The average annual income of a typical owner-operator is about $220,000 to $240,000 per year. Allow for any sort of skills or training courses that you take. You can also hire someone to run your social media or prepare billboards, commercials or online ads. So be honest about how often you may need to stay in a comfortable room. Owner-Operator Income Estimation calculator. 2022 These costs must be paid regularly according to the country or state that you operate in. Are there certain permits or licenses you need for transporting certain materials? All Rights Reserved. During the first phase of training pay is often $400 a week and the second phase is usually $500 - $550 a week. On the Rigbooks site, one of our most popular resources is theOwner-Operator Income Estimation calculator. Percent of load programs pay anywhere between 25% to 85% of the gross load revenue. By opting for deductions you qualify for, you can bring down your taxes, but you must be able to prove most of your expenses. A single fill up of two 150 gallon tanks can run over $1,400. These owner-operator expense sheets are available in many different formats. Unless you have a spouse whose job provides you with health insurance, you will need to get your own. Some apps offer rewards programs leading to free hotel nights. Similarly, you will also need to pay staff for administrative tasks or outsourced services such as accounting, bookkeeping, customer service, dispatching, and others. A transportation management system, such as the Truckstop ITS Dispatch, dramatically reduces the amount of paperwork you need to manually fill out. Things like fuel costs, food costs, and maintenance are all examples of variable costs. 3. Thatll give you your estimated cost per mile.if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[468,60],'bigrighq_com-large-mobile-banner-1','ezslot_0',122,'0','0'])};__ez_fad_position('div-gpt-ad-bigrighq_com-large-mobile-banner-1-0'); So for example if you calculated you had $100,000 in total fixed and variable annual expenses and planned on covering 75,000 miles next year: 100,000 operating expenses /75,000 miles = 1.33 cents a mile. So youll need to budget for regular service visits and repairs. Lets look quickly at adding revenue. Answer (1 of 5): At least for me, there's a goodhearted saying that finance guys don't like accountants; you know, finance is highly technical mathematics, and accountants can buy their calculators at the DOLLAR STORE ( I mean, at university, you really can only use a four-function calculator fo. Taxes (corporate, road use, and fuel) are also a significant expense for an owner-operator or truck driver that should be paid every quarter. You can cut your toll expenses by taking alternate routes when possible, but be sure to calculate mileage and time for both routes and compare them. Click to see what this looks like. Goo Goo Muck. There are all sorts of insurance that you may either be required to get or may decide to get, including: Unless you get it from a spouse or another source, youll also need health insurance. This is the gross revenue for the load or "truck gross". The amount an owner-operator takes home depends on multiple factors such as maintenance costs, fuel price fluctuations, freight broker costs (if they are involved), load board fees, and other fixed and variable expenses. Some truck drivers opt for a small microwave (to get hot meals) and a refrigerator in their truck (to store drinks and food) and choose grocery stores for purchases to lower their expenses for provisions. If youre leasing to a company, they take a larger commission, but there are other perks which make up for this, such as: Does your state have recurring business license costs? In this article, Ill give you a quick explanation for why cost-reduction is so important, and then a rundown of what the most common expenses are and how you might estimate how much theyll cost you. Depending on how you are set up as a business, you can a have a number of different taxes. Dont budget yourself so tight you cant handle a surprise. Check with your health insurance provider about state-to-state coverage. Owner-operators can make good money, averaging more than $221,000 per year. Dont forget the costs of operating there when you arent on the road. Under truck-related expenses well include: Truck expenses are the second-biggest expense behind fuel. You may also require software for your truck depending on your navigation or onboard computing system. Look into EZ passes and other programs for potential discounts. Still, most experienced truckers will agree that keeping your expenses down is one of the best ways to increase an owner operators income. Rather than waiting for a check, the bottom line is that you pay a small percentage of the invoice and receive your money right away. for more info. A common complaint among carriers is around the struggle of negotiating with brokers. Also be aware of any local business license requirements. We put together this article to help you decide if buying an 18 wheeler is a good investment. Always be aware of when payments are due and how long is left in your payment plan. Your average owner-operator spends anywhere from $50,000 to $70,000 on fuel. I don't have to say some company guys clear that. After expenses, an owner-operator usually makes, on average, 70% of the gross revenue as take home income. This leaves the remaining 30% for expenses such as insurance, federal registrations, truck and trailer payments, fuel and on the road living expenses. My name is Scott Currey. When truck drivers reduce expenses, their net income increases. You may have additional costs associated with emissions testing or new emissions laws. Below, youll find a list of the most common fixed and variable expenses that a truck driver should account for: Fuel is one of the biggest expenses of an owner-operator since they are estimated to spend around $50,000 to $70,000 on fuel alone. Freight brokers match truckers with shippers, potentially providing you with a steady stream of loads to haul. Be realistic about how much food can cost and remember often prices on the highway are higher. Stuff happens. There are two common owner operator income programs: percent of load or mileage. Contact us Certain routes have road tolls (also known as turnpikes), which are typically controlled access highways. Youll pay a flat rate per invoice, and, in most cases, get paid on the same day. Safe travels! Occupational accidents, physical damage, and bobtail are typically insurance coverages that should be included. This article will probably be most helpful to you if youre brainstorming getting into the business. Be honest with yourself about your spending habits when it comes to meals and snacks. Heres an article we wrote that goes into more depth on the differences between fixed and variable costs. Insurance for a single truck can run anywhere from $5,000 to $10,000, although there are really no upper limits because you can always pay more if you want more extensive coverage. On the other hand, variable costs (also referred to as variable expenses) are expenses that depend on other factors and can fluctuate. Expenses break down into two main categories: fixed and variable. What are an Owner Operator's Expenses? Keeping on top of tire maintenance and replacing them regularly can lead to savings in not only truck repair but also help save you from down time and lost income. Thus the average owner operator pay drops to around $50,000-$60,000 take-home . Without factoring, you haul a load, submit aninvoice, and then wait to get paid. Recourse factoring is typically less expensive since the factoring service is assuming less risk. So to maximize your income, you will want to reduce your expenses where possible. If it is your home office, make sure you keep track of the same information to deduct on your personal taxes. You may be the boss, but you are probably going to need some help. We are sorry, something went wrong. Terms & Conditions. If you operate more than one rig, inquire about multiple vehicle discounts. To get an estimate of how much you will spend on fuel, take the price of fuel per gallon and divide it by what your average miles per gallon is. Roaming plans can vary by state and country depending on the carrier. Its a tool you can use to plug in estimates of your business income and expenses to see how much you can expect to make, and how changing your various business costs impacts your bottom line. If you drive a refrigerated truck or have other specialty deliveries, dont forget to take this into account. Should you get a new or used truck? Truck expenses depend on whether you are buying a truck or leasing it. Youre required by law to maintain your truck in safe operating condition, and putting off needed maintenance only ensures a massive repair bill down the line. Instead, budget for these costs so you wont be caught by surprise. DaiLo_2jz 2 yr. ago. In this section, well be taking a closer look at some of the best tips and tricks that you can apply to reduce your overall expenses as an employed trucker or an owner-operator. The average company trucker salary is around $50,000-$55,000. While most truckers assume that all fixed costs are inevitable, and only variable costs can be reduced, with advanced planning, selecting the right leases, and various other strategies, truck drivers are able to also reduce various types of fixed costs. Consider payoff opportunities if possible and, when you can, ask about discounts based upon multiple policies. On the road, look into travel and lodging apps to get the best rates and to help you stay within your budget. This can be an excellent option, but it isnt free. Also, make sure you understand whats not covered. Always make sure to look for the plan thats right based on your travel. Your average owner-operator spends anywhere from $50,000 to $70,000 on fuel. A little about me: I grew up in a trucking family and from an early age I learned about the day-to-day problems that truck owner/operators have to deal with. Owner-operators can make good money, averaging more than $221,000 per year. Privacy Policy | In this article, well be covering all relevant truck driver expenses in detail and also provide important tips and tricks on how youre able to reduce them. Eventually that led to the idea of putting all those tools together in one package. Fuel is another major owner-operator expense, with the average cost between $50,000 and $70,000 each year. According to Indeed, an independent truck driver's gross pay averages $183,000 per year, but expenses can run over 70% percent. Even if your truck is completely paid off, maintenance and tire costs are still enough to be your second biggest expense. Expenses for provisions can easily amount to $30 $50 daily. If you have a company or route history to work from, you have a good idea of how many miles you will rack up in a year. Truck maintenance and repair is also a very big expense for many owner-operators. Truckstop offers a carrier load board to keep you on the road and in the money. Also budget for tax preparation services. Dont forget to account for your annual licensing and permitting fees. (If you think the fault is on the our end, Id love to hear any feedback you have.). But because costs eat up around 95% of your revenue, making that small improvement is the equivalent of adding $50,000 in revenue to your business! Some of the most common expenses that are deductible include repayments on truck loans, leases, fuel, business loan interest, DOT costs, truck repairs, insurance, and various others. if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[250,250],'bigrighq_com-box-4','ezslot_5',118,'0','0'])};__ez_fad_position('div-gpt-ad-bigrighq_com-box-4-0');Depending on local laws, you may need business licenses or certifications. From this $1.5 he spends $0.56 on fuel and $0.44 on the other variable expenses. 236k to the truck 97k in my bank 56k tax purpose. Eating on the road adds up quick. 242 Likes, 62 Comments. What is an Owner Operator Truck Driver's Salary? Hiring O/O's now in Milwaukee, Wisconsin 80% Gross Sweet Express Milwaukee, WI. Things like truck insurance, truck payments, health insurance, and permits are all examples of fixed costs. The truck you drive is bound to be your biggest expense as an owner-operator. Here, well cover the expenses that are typically the most necessary for running a profitable business. Fixed costs (also referred to as fixed expenses) are expenses that remain the same each month, such as truck insurance, health insurance, permits, truck loan repayments, leases, and similar types of expenses. These services can run from $100 for a simple website to the thousands of dollars based upon your operations professional needs. This means that an owner-operators expenses can amount to more than $150,000 keeping in mind that they are expected to gross between $220,000 and $240,000 before deducting expenses (fuel costs, insurance, taxes, etc.). You need to estimate further an accurate owner-operator salary and the amount of money you would have left after paying those expenses. If you are traveling overnight and staying in places besides the cab of your truck, those lodging costs can be a significant expense. Contact your local government offices for requirements. Here's the best fuel efficiency improvement techniques. Naturally, there is a fee for this service, which typically ranges from 2.5% to 5% per invoice, depending on business volume. Growing your business is important for an operation of any size, even yours. However, it is best to minimize them by choosing inexpensive lodging options. Some factoring services only protect you if the client goes bankrupt, while others will cover the cost of virtually all non-payments. Variable costs are expenses that vary depending on how much you are driving and what kind of work youre doing. One way is adding to revenue. This can also include the storage of your rig at your home. XYZ will take a cut of that money and pass on to (pay) you what is left. If you do, this is an additional expense and can cost around $180 per month. Do you have what it takes to become a broker? Aside from truck insurance, it is also important to purchase health insurance. It doesnt seem like much, considering you may be spending $50,000 on fuel a year. On average, maintenance is around 10% of total expenses. Owner-operators rely on many different types of professional services. 16 Reasons New Truck Drivers Quit Within Two Years, How To Manage Diabetes As A Commercial Truck Driver. -And we see that he gets jobs with an average of $1.5 per mile rate. Its largely up to you. While there are pros and cons to each, studies show that percentage-paid truckers are more satisfied with their jobs overall, though they tend to switch carriers more often to keep up with the best rates. In a nutshell, fixed costs are those expenses that stay pretty much constant month after month. Or maybe for one night you just dont want to stay in your rig and wouldnt mind a hot shower. Consult local insurance laws about requirements. Toll roads are common in the United States (also in other countries) and usually provide a more direct route compared to off-highway routes. This is true even if your truck is completely paid off and your main truck-related expense is maintenance and tires. Youll also be able to bring up detailed reports to help you make smarter business decisions. Your variable costs are the things you have to budget for, but those numbers could easily change based upon how many miles you accumulate. Please take note that some of these license and permit fees vary depending on the type of truck you operate and the state that your truck is registered in. As you probably know, fuel is the biggest cost of owning and operating a truck. If you are spending more on keeping your old rig on the road than a monthly payment would cost, its probably time to go truck shopping. Thank you for subscribing to the Truckstop newsletter. How much do Owner operators make after expenses? Your rig is going to need maintenance inside and out. You will most likely find that paying tolls is more inexpensive than paying extra fuel costs. Factoring allows you to essentially sell your invoice to the factoring service. Tickets, accidents, longer than expected runs, breakdowns. if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[250,250],'bigrighq_com-medrectangle-4','ezslot_10',117,'0','0'])};__ez_fad_position('div-gpt-ad-bigrighq_com-medrectangle-4-0');If you have an older truck and you are spending a lot of money on repairs, it might be time to consider something newer. This consistency is important for many truckers, especially those with families at home. Your ad could be here. The monthly lease cost depends on the leasing company and the type of truck. Also take note of tire expenses, which can range from $1,000 to $4,000, so you should opt for durable tires that will last longer and need fewer repairs. Start with itemizing your fixed costs. It is best to consult a tax attorney before filing taxes each year. There are some great smartphone apps out there to help you with navigation, scheduling, invoicing and other trucking needs. Are there tolls in the regions youll be running that will impact your routes? Exactly which ones you have will depend on the specifics of your equipment, the loads you carry, the runs you choose, and even your personal habits. Truckstop offers non-recourse factoring that will cover you against all non-payments from approved brokers, as long as you arent at fault. There is a 15.3% self-employment tax (12.4% for Social Security and 2.9% for Medicare) for owner-operators, and they are recommended to set aside 25% to 30% of weekly income for taxes. Experienced owner-operators who want to revisit their budgets and streamline their costs should also find it helpful. Factors that influence variable expenses are how far you are driving, the type of freight you are moving, and how long youre operating your truck. Note that there are two types of factoring: recourse and non-recourse. If you want to increase profitability you can lower your costs or raise your miles (although some costs will go up accordingly). Its best to consult with a tax attorney or CPA each year, along with keeping detailed records. You may have other office workers, janitorial staff or truck maintenance employees you need to add to your payroll budget. Your truck is the second biggest expense you'll face as an owner-operator. Among this same group, most are probably making around 300k. It is important to compute your fuel cost per mile, in order to calculate how profitable your trip is going to be. Every broker sets its own rates, but in general, you can expect to pay 10% to 20% of the gross margin on each load. Although you may be tempted to skimp on some expenses to save money, it is always better, in the long run, to keep your truck in optimal running condition to prevent running a massive repair bill. Do you have an office? Let's say they keep 25% (for their services). To calculate your cost per mile, simply divide your total expenses by your total miles. Its often left off the list. tdemyer 2 yr. ago. average owner operator pay drops to around $50,000-$60,000 take-home, a survey of 4,000 truckers conducted by StayMetrics, studies show that percentage-paid truckers are more satisfied with their jobs overall, fixed expenses, like truck payments, insurance, and permits. While the industry average is 40 days, its not unusual to wait as long as 90 days to get paid. 8 Biggest (and Necessary) Owner-Operator Expenses. License and permit costs include license renewal fees, business licenses, transport permits, registration fees, and vehicle inspections. $8500-$3500 = $5000. There are also lease-to-own options (also known as lease-purchase agreements) for truck drivers who wish to lease and eventually own the truck. These highways can be traveled by paying a fee (toll) in order to save time. Not only insurance on your rig but there may be insurance requirements on you as a driver or business operator. How a husband and wife team went from running a van to operating their own trucking company using Truckstop. If you are currently an owner-operator and you end up getting amounts from the Income Estimator that you think are incorrect, it could be a sign youre overlooking an expense or two somewhere. Commercial truck insurance can be complex. Owner operators with their own motor carrier authority should be grossing at the "very least" 200k. I was into computers and programming as a kid so over the years I helped write small computer programs that helped my parents run their company better. Figuring out how much youll be spending on fuel is just a matter of figuring out your trucks average cost per mile (fuel cost per gallon divided by average MPG) and then multiplying it by the number of miles you expect to be running. Professional services can be loosely defined as the services you pay for to make your business run more smoothly. For example, some policies dont cover weather events and other acts of God.. My name is Jason Forrest, and Im the creator ofRigbooks. Depending on the age of your truck, maintenance and repair fees can easily run well over $10,000 annually. Rather than paying per load, youll pay a monthly subscription fee for access to the load board. What does that mean? For instance, if your fuel costs are high, you may look at reducing your speed, cutting idle time, and renegotiate your fuel surcharges with your carrier. And Rigbooks was born. There are many possible expenses that an owner-operator might face. Helpful Information For Truckers In The USA. You can do so by keeping receipts; however, you should note that not every expense is deductible. Do you have what it takes to become a broker?View Webinar, Search active loads by location and equipment type.FIND LOADS . With a little planning and easy-to-use technology, you will be growing your business in no time. Many independent truck drivers sign with a carrier to get consistent work. In the current market, fuel prices can also spike very quickly as well as have wide cost variations from state to state. (But be careful changing carriers too muchsometimes staying with a carrier pays better in the long-term as you develop a closer business relationship over a number of years.). As you get to know your own operation, it will become more concrete and you are on your way to a successful operation. These dont just include truck and driving expenditures, but also registrations, office costs and fees. Although expedited payment fees are small, its important to account for them in your budget. Add all your cost estimates (fixed and variable costs) and divide by the number of miles you think you will cover. Check with the relevant government authority for current pricing. The other way is reducing your costs. How much an owner operator gets paid is affected greatly by expenses. But if it isnt paid, youre on the hook to pay back the factoring service and attempt to collect the debt yourself. Many insurance policies are not valid in foreign countries, so if your route takes you abroad budget for supplemental insurance. But in the end you will end up saving money and avoid some major headaches. These programs work best for those who are very careful with their finances and who dont budget based on best-case scenarios. EXPENSES: General: HWY-2290 with visible watermark: If you do not have one, Sweet Express can provide one at a fee of $550. I also recommend setting aside a dedicated maintenance fund so that youll have the money ready when things go wrong (as they always do). The average owner-operator runs a profit margin of approximately 5%, which means that only about $1 of every $20 in gross income actually counts as profit. Here are a few of the most common. While some truck drivers are employed by a trucking company and receive income for each mile they cover, independent owner-operators have their own trucks and plan their own schedules. Are there some private scales that youll have to pay to use? They pay you right away and then collect the money when the invoice is paid. Moreover, the Federal Motor Carrier Safety Administration (FMCSA) in the United States stipulates that commercial motor vehicles need to be operated safely and must be inspected at least once every 12 months according to the Minimum Periodic Inspection Standards. Most semi trucks are equipped with a sleeper cab, which is a compartment that is attached to the back of the tractor unit and features a full-length bed (about 80 inches in length, which equates to just over 2 meters). To put that in simple language: its tough to make money because you have to pay out almost as you have coming in. When buying tires, you should consider the cost per tire as well as the expected life of the tire to decide on the most cost-effective choice. An owner-operator must account for truck maintenance, fuel, tolls, insurance, provisions, taxes, licenses, permits, and more. Be sure to compare leasing companies to determine which one has the most suitable leasing terms available. Owner-Operator Truck Driver Salary After Expenses A truck driver can expect a salary of $45,000 to $80,000 a year, considering the Hours of Service Regulations set by the Federal Motor Carrier Safety Administration (FMCSA) in the United States and after deducting all relevant expenses. WithPay, you can submit your request anytime and receive fuel card payment within one hour in exchange for a small fee. Calculate utilities, rent, office supplies and other costs. . . CALCULATING TOTAL ANNUAL OWNER OPERATOR COSTS TOTAL GROSS INCOME = $ 171,870 FIXED COSTS + VARIABLE COSTS = TOTAL ANNUAL COSTS $41,030+ $91,180 = $132,210 NET PROFIT = $39,660 (AFTER DRIVER WAGES) TOTAL ANNUAL COSTS DIVIDED BY ANNUAL MILES = TRUCKING COST PER MILE $132,210 DIVIDED BY 120,000 = $1.101 PER MILE You may need to hire a bookkeeper or accountant, who do charge fees. Ride the sweet spot as much as you safely and practically can, and you can lower your fuel spend. Expenses for an owner operator can vary widely. 2. If youve done the work in estimating your income and expenses, you can try to plug these values in ourfree Income Estimation calculatorto see what kind of per-mile cost youll have and per-mile revenue youll need to make to cover them. You will also want to look at your empty miles. Annual licensing and permits are also a part of your fixed expense list. Not only might you have costs for parking while at your home base, you might require parking while on the road. (They can change, of course, whether thats due to renegotiation, refinancing, or price changes, but the point is that in the short-term theyre pretty static.). So on average, that new gig only results in $2,500 profit for you. But thats calculated before the essential owner-operator expenses that are a necessary part of running a successful business. These are set by law and may vary by state. How to stop neglecting preventative maintenance in your truck and save a ton of money in repair costs. If youre concerned about paying for fuel, Truckstop lets you choose to bepaid to your EFS or Fleet One fuel card. Dont forget tires! Here are some useful resources that you can use to estimate your toll in the United States and Europe: Truck maintenance and repairs are variable expenses for truck operators. First full year. Depending on where you drive in the country, tolls might be something you need to include in your budget. The average annual Owner Operator Reefer salary as of December, 2022 is $169,707. If you are an owner-operator who leases onto a carrier or is thinking about doing so, you should be aware that some carriers can get their drivers discounts on expenses like tires and fuel. It may be tempting to skip some maintenance to lower your bills, but this would be a major mistake. These are the expenditures that are not going to change and you can budget monthly. Taxes are another category of owner-operator expenses that you will need to consider. You may have to pay a percentage to a broker (in the 10-20% area) or to a load board site. When you are buying a used truck, you can expect to pay around $50,000 to $140,000 and around $80,000 to $200,000 for a new semi-truck. You obviously need revenue too, of course, but it shows you what gives you a bigger bang for your buck. You can estimate your cost per mile by dividing your trucks miles per gallon (MPG) by the current cost per gallon for fuel and then multiplying by the number of miles you plan to drive. Rigbooks is a cloud-based software that makes it easier for small and medium-sized trucking companies run their business while keeping organized. The first step to understanding your expenses is to learn about which expenses are fixed costs and which are variable. What Are The Factors That Impact an Owner-Operator's Earnings? Insurance for a semi-truck costs about $3,000 to $5,000 annually. However, this amount can vary greatly depending on their degree of experience, location, and other factors. Note that this is different from factoring, as you will receive your money when the broker pays the invoice. Set out a budget and try your best to stick to that amount. Make sure you keep up on all of your expiration dates. Carriers can deduct a portion of your meals on the road from your taxes under a deduction known as per diem, but youll still want to keep your food budget reasonably low. Variations are due to things like: miles run, load weight, how many tires you have, types of tires you buy, and wear patterns of the truck. If its more than just you, consider group plans for small businesses to cover other drivers and employees. BigRigHq.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. Provisions, fuel, toll, and maintenance costs are some examples of variable expenses. Heres an article we wrote that goes into more depth on the differences between fixed and variable costs. The average owner-operator base income is nearly $144,000 according to Indeed.com. Depending on your operation you may also be required to pay workmans compensation insurance. While ZipRecruiter is seeing annual salaries as high as $398,500 and as low as $41,000, the majority of Owner Operator Truck Driver salaries currently range between $148,500 (25th percentile) to $341,500 (75th percentile) with top earners (90th percentile) making $389,500 annually across the United States. Some companies pay less and some pay a little more. Also take into account water, coffee and snack allowances to keep in the cab while you are on the road. Tire expenses will vary also. If you're considering buying a new Semi Truck vs a used one, here's a quick breakdown of the pros and cons of each. The highest earning tanker owner-operators are exceeding $6,000 on a weekly basis. However, this income is before deduction of operating and business expenses. If an owner-operator or truck driver travels overnight, they may need somewhere to rest. EXPENSES: What it costs to operate your truck. At this point in time, the average health insurance cost for an individual who is paying for it himself is about $3,400 per year. Also be aware of any local regulations regarding operations of business in a residence. This is the one that can hurt the most. Also assuming you get $2 per mile, which is very reasonable, you would make $200,000 that year. Many people are surprised to learn that food is one of the biggest expenses after fuel and truck-related costs. Owner-operator expense sheets are documents used to track all of an owner-operator's expenses. As a small business owner it just isnt worth the risk of fines or computer viruses. Remember that taxes fall into multiple categories: When youre on the road, you have to eat. However, your variable costs can be reduced with a variety of strategies. The goal is to get that number as low as possible to maximize profitability for your operation. With mileage pay, youre more likely to have deadhead covered and your pay is the same regardless of how much trucking companies make on their load invoice, good or bad. The majority pay between $62,500 to $240,000 per year. According to Indeed, an independent truck drivers gross pay averages $183,000 per year, but expenses can run over 70% percent. Looked at this way, its easy to see why you should be eliminating as many costs as possible. Thus the average owner operator pay drops to around $50,000-$60,000 take-home. Trucks can also be leased for drivers who dont want to make a large initial investment. Taking care of your health with better food will also reduce your healthcare expenses long-term. Some states (namely California) have more stringent environmental requirements than other states. Many independent truck drivers sign with a carrier to get consistent work. Also consider the cost of maintaining and replacing straps, winches and other gear for flatbed trailers. So depending on how you need to market your services, factor in some money for websites, advertisements and promotions. Even with someone doing your books you may still need software for your operation. 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