For those wanting to be O/O

[jdrentzjr]

read this archived thread:
http://www.layover.com/forums/layove...ors-28966.html

I could not update it from the archives so I had to start a new thread.

As of the end of August '07 I have a NET PROFIT of $37900 for the '07 year. This is includes after taxes and maintainance account contributions. The maint./tax account has over $13k right now, and is growing. I'm paying $2k quarterly to the IRS. I've driven 102,323 paid miles so far this year. My cost per mile for fuel is .163. This is of course after discounts and fuel surcharge.

My '07 International is running well and is avg. 6.5mpg. I have 192k on the odometer it this time and I still have all original rubber. I'm meticulous about tire maintainance!

If I continue at this pace I will have my truck paid for, or trade for another new one, in three more years. Remember, Crete does not offer a lease purchase. It is an out-right buy through their bank, or you can arrange your own financing, and the price you pay for a new truck is a discounted price. My '07 was $88,500. It would have cost me over $100k at a dealer.

For those who want to do a lease option I ask,why? When you could buy one out-right. The lease payments made no sense to me when I was researching companies, and it still doesn't!

Good luck to all you wanabe O/O's. It's not for those with little or no business sense.

[icantinaturner]

I think this post deserves a bump because it is pretty informative to anyone considering going O/O.

Check out JD's posts and the responses to them. JD did some serious homework before taking the plunge and any potential O/O needs to get brutally honest with him/herself regarding their ability to do that work. If you can't operate a calculator and do the pencil work beforehand, it is highly unlikely that you'll last long as an O/O.

Notice that he bought a "smart truck" -- suited to his needs -- rather than something to impress the troops at the truck stops -- and he seems to be tracking his income while watching his pennies.

[strangewill]

My cost per mile for fuel is .163

Whoa, I was interested in understanding the math behind it, and I was looking at some .50/mile for fuel, then again I don't really understand fuel surcharge and other ways you get the cost down.

Not that I was really interested in becoming an O/O, but I was curious how they were able to push profits when gas is so high.

[olesh]

Wouldnt you also get a good chunk of money back come tax season? I imagine an O/O would have the ability to claim more than a few things.

[aftershock]

Originally Posted by olesh

Wouldnt you also get a good chunk of money back come tax season?

I imagine an O/O would have the ability to claim more than a few things.

YeAH, .......... but is insanity a legit deduction?

Jest keeding, Olesh,......... you're asking a good question.

[olesh]

Originally Posted by aftershock

YeAH, .......... but is insanity a legit deduction?

Jest keeding, Olesh,......... you're asking a good question.

Sadly insanity isnt. Im not up on all tax laws/rules, but couldnt you deduct the interest on your truck loan, repairs/maintenace, phone, internet to name a few? I would imagine at the end of the year you could very well claim in the ballpark of $10-$20k, or more. I obviously dont have any numbers as Im not even a driver yet. I know you dont get all your deductions back, but you may get enough back to bump your previous years net income by $10k or more. Am I way off here?

[shoes]

Originally Posted by jdrentzjr

read this archived thread:
http://www.layover.com/forums/layove...ors-28966.html

I could not update it from the archives so I had to start a new thread.

As of the end of August '07 I have a NET PROFIT of $37900 for the '07 year.

jdrentzer - good post; very informative. But I'm curious about your 'net profit.' You didn't say if you paid yourself anything, or how much. Is your net profit of 37k after your salary, or is that your salary? If you did pay yourself a reasonable, fair market wage, and then cleared an additional 37k - then that is indeed impressive. Thanks - look forward to hearing from you.

[icantinaturner]

Originally Posted by olesh

Sadly insanity isnt. Im not up on all tax laws/rules, but couldnt you deduct the interest on your truck loan, repairs/maintenace, phone, internet to name a few? I would imagine at the end of the year you could very well claim in the ballpark of $10-$20k, or more. I obviously dont have any numbers as Im not even a driver yet. I know you dont get all your deductions back, but you may get enough back to bump your previous years net income by $10k or more. Am I way off here?

Yes, you're off and insanity should be deductible. The care for the mentally ill person is probably a legit medical deduction.

Without a doubt, O/Os can deduct just about everything it takes to run their *business* when it's tax time. Even the cost of preparing the tax return, the mileage to/from the tax preparer's office/post office and postage is deductible on the following year's return. Sweet huh?

Unfortunately, it isn't the sweet deal that it seems to be. For starters, even if the O/O's *effective income tax rate* is say 10%, he's still spending 90 cents on every dollar he drags out of his wallet. Some O/Os believe that if the spend $500 deductible dollars on cool chicken lights, they get a write-off and have saved $500. Doesn't work that way. They've effectively spent $450 that could probably have been better spent elsewhere -- like paying off the truck...

Another neat aspect is that the O/O gets to pay *all* of his payroll tax in the form of self employment tax. Company drivers pay about half (+ medicare) and the other half is paid by the employer -- before the driver even sees his check.

The beauty of all this is that it proves that there ain't no such thing as a free lunch. Our tax system is pay-as-you-go. The O/O pays all his taxes quarterly or at the end of the year with a small penalty.

The company driver has the money withheld every payday based on the number of exemptions he initially claimed on the W4 (?). The tax *refund* folks get back is the difference is what is owed and what was paid in throughout the year. Basically, the person getting the refund has really given the government a nice tax-free loan over the course of the year.

[aftershock]

Originally Posted by icantinaturner

The company driver has the money withheld every payday based on the number of exemptions he initially claimed on the W4 (?). The tax *refund* folks get back is the difference is what is owed and what was paid in throughout the year. Basically,


the person getting the refund has really given the government a nice tax-free loan over the course of the year.

I'm glad you pointed that out, Ike.
I'm amazed by the number of folks who think they've worked the system to THEIR benefit when they get a big return at the end of the tax season. All y'all gotta do is claim MORE dependents.
So simple,............ even a caveman could figure out all the advantages of that method of getting ahead.

Kinda reminds me of the gamblers who play the slot machines, plunk in $500, ..... score a $100 "Jackpot" --- and commence to screaming
"I WON !"

[icantinaturner]

Originally Posted by strangewill

Whoa, I was interested in understanding the math behind it, and I was looking at some .50/mile for fuel, then again I don't really understand fuel surcharge and other ways you get the cost down.

Not that I was really interested in becoming an O/O, but I was curious how they were able to push profits when gas is so high.

You were thinking correctly. At today's fuel prices JD could easily be spending .50/mile for fuel. If he gets a .34/mile fuel surcharge passed through to him by Crete, his fuel cost would be in the neighborhood of what he mentioned. Some unscrupulous (clever?) companies charge the customer a fuel surcharge of X cents per mile on a given load, but only pass part of that to the driver.

A driver can keep the costs down by not idling away $3 per gal fuel and driving a little slower as JD indicated.