Any help I can get on the steps of having a guy lease on to my company. I am out here running in Colorado and my brother wants to join in on my success. However I don't want to hire him as an employee and get raked on workmens comp and other things so I thought "What if I subed out my work to him?" Is that similar to having him lease on?
Any advice would be appreciated. Also what effects will that have on my authority and insurance?

Thanks
If I left out any pertinent info let me know so I can fill in the gaps.

 

That is pretty much what is happening when you lease someone on to your company - you are subcontracting to them. Have a lawyer draw up a good contract that covers all the details, and make sure you give him a 1099 at the end of the year - your accountant should be able to help you with this.

Now if you are going to pay his permits and base plates, then things get a bit trickier, as you need to determine whose name the plates are in, and whose name the permits are in. Same goes for insurance - is he going to pull your trailer or his? If it is his, who pays the cargo insurance?

 

If he is going to run under your authority, you will be required to carry him on your insurance. It will basically double on what you are paying on one truck for cargo and liability insurance. You can have him pay it or you can do it yourself. Everything should be spelled out in a contract so that there are no misunderstandings.

 

Gman, would the driver be required to provide his own insurance if hes providing thr tractor?

For example, when I was with United I paid my collsion/bobtail insurance on the tractor, as well as my own workman's comp. United paid for the trailer insurance, and trailer...however I still paid the cargo insurance through settlement deduction.

Are we comparing apples to oranges?

 

Whats The # 1 Rule in Business... DON'T Hire Friends Or Family

 

BanditsCousin, perhaps household goods works differently than other types of carriers. When you lease to most carriers, they furnish the cargo and liability insurance. The owner operator is usually only responsible for bobtail and either workers comp or an accident policy to cover himself and his drivers.

I have known of smaller carriers who work a deal where the owner operator pays the insurance. The carrier then accepts a lower percentage of the freight rate for the use of his authority. I met one guy who had authority and had several family members who operated under his MC number. Each paid their own insurance and they hired someone to dispatch and look for loads, do the fuel taxes, etc., Each one put in a certain percentage to take care of overhead. Everyone basically did what they wanted. It seemed to work for them.

 

I used to live in Colorado, and he (your brother) would have to provide his own workmans comp, as well as bobtail insurance leased onto you, but this was 6 yrs ago, might want to ask your lawyer..

 

I might be incorrect on my terms, but the ideas are the same

In HHG, the norm is a percentage of the linehaul goes to the insurance of the shipment. For example, if I flip my rig off a bridge or the truck goes up in flames (it happens a LOT more than one would think with 19.5" tires/drums heating up down hills!). I think my percent is 3%.

Some carriers (ie: North American-Beltman Group) has a contract with North American so that there is NO BP&D insurance deduction, however, their % rate for o/o's is a bit less than industry aveage. Its really apples and apples.

So, to answer your question G-man, HHG is a little different. In addition to liability/collison/bobtail insurance on the cab (which all o/o's incur), there is the additonal deduction in HHG. Now, if I'm not hauling, I'm not paying The deduction is off every shipment's linehaul, and in the summer months I've paid hundreds

 

I forgot to mention workman's comp. I am required to have a "special" workman's comp setup for my casual labor in Ohio, and I think 1 other state.

I kinda forgot to get that coverage this summer :wink: Must have just slipped my mind since I rarely get there :lol: