I will try to clear things up a bit. A lease operator will often call themselves an owner operator, but in reality he is leasing the truck from the carrier and is also getting his loads from the same carrier. If he leaves the carrier he usually needs to leave the truck since the carrier actually owns the truck. Lease operators rarely complete their lease. In fact, some carriers will tell them up front that it is a straight lease and if they complete it then they can lease another truck or walk away from the lease. Some carriers have a balloon payment at the end of the lease where the lease operator can purchase the truck. The lease operator is usually responsible for all upkeep and maintenance of the truck along with a mandatory maintenance account, performance bond and all the other expenses associated with truck ownership. Most of these companies have forced dispatch and that is where the rub comes in with the IRS.

An owner operator owns his truck. He may also lease his truck from a leasing company and then lease it to a carrier. He does not lease his truck from the carrier with whom he contracts to lease his truck. He can leave the carrier at any time and take his truck with him. He is responsible for all costs associated with running his business. He is usually responsible for all maintenance, base plates, and any other expenses associated with running his business. He decides when and where he runs and which loads that he takes.

A carrier has his own authority and owns his own equipment. He finds his own loads, buys his own base plates and permits and does his own paperwork such as IFTA. There is more to being a motor carrier than I am mentioning, but you get the idea.

Whether you are a lease operator, owner operator or motor carrier you must operate under motor carrier authority to haul freight. A motor carrier may only have a single truck, but he is a motor carrier none the less. Being a motor carrier has nothing to do with the size of your company. It has to do with having authority.

As far as how the IRS makes the distinction between an employee and an independent contractor, it has more to do with control. If the owner operator or lease operator has physical control over the equipment and can decide which loads that he hauls and where he goes then he can be considered an independent contractor. If the carrier has forced dispatch then I am not sure that he can be considered independent. That is basically the argument. It is primarily the control issue. I sat down with the IRS several years ago to clarify this issue and that is basically what I was told. They have made a few changes since that time to expand their definition, but that is the basic issue as it was explained to me.

If you are a lease operator or owner operator you don't need a business license. If you are a motor carrier you will need to check with your local licensing agency to see if you need a business license. If you operate out of your home then you may or may not need a license.

 

Well i am officially completely confused now. I'm sitting here pulling out what's left of my hair. I can't grasp the idea of going into business, buy or lease purchase a truck/trailer, become an owner operator and then "lease" onto some one's authority. WHAT???? They tell you that you must "qualify" to be hired but you own your own business. WHAT?????????? The company tells you that you must stay out a certain number of days and restricts you to a certain amount of home time. Even though you are your own boss of you own company. WHAT???????????? You can choose what loads you want to pull and what areas you want to go, but it must only be loads for that company you lease onto. WHAT???????????? You are your own boss but restrictions apply!!!!!!!!!! LOL. WHAT???????? How does this competely differ from being a company paid driver?????????? Just because you pick your own loads? I've done that for years for the company I drive for. There's a stack of load bills on the counter. I just come into the office and pick one then sign a copy and leave it in the box for dispatch. Am I considered an Owner Operator??? I don't own a truck/trailer, but everthing else is the same. Oh I don't pay fuel............or for pay for tires.....................or for a/c repairs................OH!!!!!.....I guess it is completely different.

 

Geez did Steve Booth come back? When did having your own name on the door become the end all to the world of trucking?

Go get yourself a truck and trailer and run for a while and then come back and tell us how to do it, but don't come back with any trucker math because we have been down this road way to often on here and it doesn't fly.

I'll stack my numbers up against yours anytime (when you get some) you want. Oh but how can that be I have debt on my truck and I lease to a company on their authority and we have forced dispatch and oh my the horrors.....

Look I have the upmost respect for guys that have their own authority and even provide jobs to other drivers, it's just not my thing. For alot of the reasons GMAN said, does that make my buisness any less profitable than someone who has their name on the door? I doubt it, especially if that individual is running off the load boards and not hooked up with some shippers.

 

Also could you please break up some of your postings into paragraphs, it is hard to read long drawn out post with out them.

 

Do you really know what you are talking about?? You arent a company driver, you arent a leased operator, you arent a motor carrier. What are you? And why do you have sooooo many opinions? It seems to me that you dont understand what you dont understand.

 

leasing on to a carrier and doing a lease purchase program are two completely different animals. The first is simply running under their authority, you are your own business, and an independent contractor. A lease purchase is when you make lease payments under contract for a piece of equipment. Totally different from leasing on to a carrier.

You can do both with the same carrier, some do. It usually isn't a good option however.

 

I recall when I first got into my brother-in-laws truck. He was a lonely, low on the totem pole company driver just as I am. He looked at me and said; " Welcome to the world of the bitchy trucking industry." I didn't know what he meant. He smiled his broken tooth smile and turned on the CB. Over the speaker I heard for the first time the worst flow of whining, bitching, and complaining that I'd ever heard in my life. I was 16 and the year was 1986. It is now 2010 I'm 39 and little if anything has changed.
I was simply trying to have an opinion and possibly have an intelligent discussion. It's senseless though. Owner operators and company drivers can't do it. It's beyond their ability to look outside of the box. To see the normal in a different shade of light. They have to lash out and cut down the one with unique thinking or bash the one with a different point of view. I ask you. How many Motor Carrier owners have you talked to that does the same? Most I've talked to are very nice, happy, and wealthy for the most part. The ones that are successful anyway. Company drivers and Owner Operators are not for the most part. Even the ones that are successful. They constantly complain, bitch, and whine. Why???????
To me to drive a truck and become a company driver or Owner Operator takes it's toll on a person's mentality. I've made money as a company driver. I'm sure I could make the same or more as an Owner Operator. It's not for me to put all the additional stress on myself just to make a few cents more per mile, as a glorified company driver. This of course IS what an Owner Operator IS. If it's so wonderful to be an Owner Operator then why be so bitchy all the time????
I hear stories on the CB and read postings on here all the time of how turbo's and tires blow. How the trucks break down at the worst point in time. And how the fleece operator is getting screwed over by his/her company. And how Owner Operators have such a hard life and "Just keep trucking and hope for a better load/day." But does anyone actually do something to change things. No. They just keep sitting and whining, bitching, and complaining.
I honestly love truck driving. My grandfather, father, brother-in-law, uncle, and myself have all been or was truck drivers. I love the open road. I love to hear the diesel rumble and roar. It's just the truck drivers have to hate/despise. They take it out on the one that's different, or seems to be.
I started out as a company driver in December 2000 and I'm still one. I want something different/better. I don't like being just a company driver anymore. Why would I want to become an Owner Operator? It's basically the same thing. Just more responsibility. You still have the boss telling you where and when and how. Just in a different way. I guess I'll keep quiet and just continue to do research on how to become a Motor Carrier. I think all that has helped mainly Gman. You are a true gentleman and scholar. Keep up the wonderful advise.
I will become a Motor Carrier someday. It's my goal. I will reach it. I just don't need all of the hate and name calling and nonsense along the way.

 

Lease operator - A driver leases or rents a truck from a carrier and then
contracts with the same carrier to haul their freight.

Owner operator - Driver owns a truck and leases it to a carrier to haul
their freight.

Carrier - Has motor carrier authority and can lease owner operators on to
their authority.

In all three of the above you are considered being in business for yourself. You pay all expenses associated with your equipment which includes base plates, fuel, taxes and anything else that is required to keep your truck moving and to keep your business open.

Sole proprietorship - A individual who owns a business.

Partnership - Two or more people who own a business.

Corporation or LLC - Corporation where stock certificates are issued to
the owners or investors. A corporation can have as
few as a single stockholder.

These are the three types of business structures. All three are considered a business.

 

Back in my day, a person would spend at least 10 years or more in a trade, before they would even attempt to open their own business in it.
That is how I got started in Construction. I spent about 12 years learning everything I could, before I got my State license, and started my own business.

Mortality rate of new contractors was high in the first few years of business. But I also started noticing every Tom, Dick, and Harry who could build a fence, believe they could become a Contractor. Many did so without the State license, and customers ended up screwed which reflected on the whole Industry.

In construction, you could also work as a Licensed sub-contractor, under specific sub-contract aggreement, or off a 1099, under a General Contractor.

Trucking and construction are kinda similar... lots of complaining, backstabbing, sub-contractors stealing your clients, diversion of funds, yada yada. Trucking is not much different or more complicated. But one gets to know these things, if you spend at least 10 years working/learning the trade. If you have specific goals, you will learn more.

I think the college edumacated types call that picking a major.
I majored in Bottom Buffing/Breast Finishing, and minored in Construction.

I'm almost 10 years into trucking now, and I'm beginning to be smart enough to know, no way I'm going into O/O.
Besides... I think I'm more cut out for being Adriana Lima's Professional Groomer. (I'd like to spend 10 years kneeled before that butt)

.................................

 

most big motor carriers were started by an owner operator.