How much does an owner operator make?
This is a repeated question in trucking circles. New truckers who start out as a driver and then take the faithful steps of being an owner-operator ask this question.
An owner-operator makes an average of $ 221,039 according to indeed.com. But the earning varies according to the specialization (type of load they carry). And the time spent on the road etc.
Average owner operator salary is much less while considering the expenses like fuel bill, maintenance, drivers salary, food, lodging, truck payments, etc.
We are sharing our video on how much does owner-operators make after expenses? Factors positively and negatively affecting owner-operator’s earnings are given below.
- Factors that influence how much does an owner-operator/ trucker earn per mile?:
- 4 methods to get loads as a truck owner operator:
- 1. Leasing your truck to companies is a good option:
- 2. Getting Loads through boards:
- 2.How to set up with a Freight broker for your small trucking business?:
- 3. How to pick a dispatcher as an owner-operator?:
- 4.How to make more money while driving from one location to another for owner operator?
- 5.How much does the owner-operator makes per mile depends on the freight they haul.
- 6.There are 9 factors that affect what sort of expense you incur as an independent owner-operator/trucker
- 7. The below are some best practices in business for owner-operators/truckers that help you to avoid a tax surprise while taxes are due:
Factors that influence how much does an owner-operator/ trucker earn per mile?:
Selecting good loads is the difference between profit and loss for owner operators.
The place where you select loads from also has a large impact on your profitability as an owner-operator.
As a fresher owner operator, you choose a freight broker or a dispatcher, you will find loads but there be a finders fee charged by the broker or dispatcher. If you try load boards you will get good loads but your per load pay is comparatively less in this option.
4 methods to get loads as a truck owner operator:
1. Leasing your truck to companies is a good option:
Owner-operators can be either fully independent or freelance drivers. Freelance drivers lease their equipment and time to haul loads for a carrier.
But an independent driver can haul loads of anyone anytime. Getting your loads and income depends on your experience and personal preference.
Now let us learn more about the benefits and drawbacks of leasing a truck to a carrier:
You as a trucker don’t need any authority and insurance. If you have one, then you could get a larger cut of the earings from load hauls.
There are many benefits of leasing your truck to a carrier:
No need to find and negotiate loads, the carrier will do that for you. This means you will have a steady stream of income and you need not worry about hunting and negotiating loads
There is a lot less paperwork related to trucking. Your carrier will take care of the paperwork so that you can focus on driving.
Carrier will make monthly deductions for insurance from your pay. This means you don’t have to worry about paying insurance on time your carrier will take care of that.
Maintenance is paid for at shops associated with your carrier
Up-front setup expenses can be spread out over time so you don’t take a huge financial hit when you start out.
Drawbacks of leasing with a carrier for an owner-operator/trucker:
Ultimately leasing with a carrier means truckers or owner-operators take home less money. But leasing means no strenuous work like doing paperwork, bookkeeping, insurance, finding and hunting loads, etc.
2. Getting Loads through boards:
To increase the earning potential of your trucking business:
The earnings of any trucking business depend on the loads they haul. Not all hauls are created equally.
You can get good loads from multiple places such as:
Dedicated broker contracts
Special government contracts etc.
1.How to subscribe a Load board as an owner-operator?:
Getting a load board subscription is essential for a owner operator. You can see the rate and lane where loads are operation in the area where an owner operator wants to ply.
It also shows the price of load, credit score, and the reputation of the broker posting the load, dollar per mile of a destination, few backhaul options, etc. A truckload board is a good friend of a shipper and carrier because it acts as a middle man between demand creators and supplying carriers.
Once a carrier sets up a favored route, the load board application will send the notification message to alert you of loads coming up.
Carriers, brokers, and shippers have trusted the DAT Network, credited as an industry leader with more than 60 million loads per year. Of those, 42 million are either found on the DAT Network first or nowhere else
2.How to set up with a Freight broker for your small trucking business?:
Freight Broker is an agency/company who connects owner-operator/trucker/ carrier with the shipper. Broker pitch in for the shippers and find carriers willing to haul their loads.
As a new owner-operator, it’s very hard to set up a carrier packet with an established broker. So, new truckers should try to find freight from brokers who are willing to work with them.
Here, the owner-operator will have to make sacrifices when it comes to loading payments or dollars per mile. After a while say 6 months to 1 year established brokers will allow you to set up a carrier packet with your company.
Having a good broker supplying you loads for a dedicated lane is a great way to earn some Sureshot dollars. You can access the supply capacity of a quality broker to get a very good dollar per mile earning loads.
The broker will work with you on a win-win relationship because your success means they create a reputation with the shipper as a quality shipping liaison
3. How to pick a dispatcher as an owner-operator?:
Hiring a dispatcher as a logistics arm of your business is a good idea for inexperienced owner-operators.
Dispatchers will let you know hazards, weather trouble, road or infrastructure closure, etc beforehand. Which means smoother and more timely operations.
Dispatchers also help you with operations, carrier compliance, customer service, and administrative works like billing, collections, and other paperwork.
Paperwork support includes:
- Broker Setup,
- Rate confirmation,
- Factoring submission
- Trip Reports,
- Weekly/Monthly-Paperwork (Activity Logs)
- Request Insurance Certificate.
The dispatch service usually includes:
- Dedicated Account Manager/Dispatcher,
- Load Hunting, and Negotiation,
- Fax/Email Support,
- Credit Checks,
- Driver Directions Assistance,
- Factoring Setup, and Same day funding assistance,
- Mon to Fri – support,
- Collection Assistance,
- Detention Charges Assistance.
Not all owner-operators need a dispatcher. If you have dedicated routes with brokers/shippers on to and fro hauls you don’t have to have a dispatcher.
Experienced drivers working in known routes don’t need the assistance of a dispatcher to avoid hazards and slowdowns.
A carrier with a knowledgeable and efficient operations staff might not need assistance with billing or collections operations
4.How to make more money while driving from one location to another for owner operator?
To maximize the dollar earnings for a trucker/owner-operator, figure your niche (where you want to operate), get long-term contracts from shippers/brokers, negotiate for a high dollar per mile load.
Increasing the earning potential of your trucking depends on maximizing your income potential by following the money.
And reducing expenses by wilful saving and plannings for your trucking business overheads (costs).
How to follow the money as an owner-operator?
Experience truckers tell the new owner-operators to follow the money, How do you do that?
To follow the money you need to have a fair idea about the lane’s average dollar per mile.
You need to select the best lane for money-making. See all the routes to and fro book loads to a maximum dollar per mile giving lanes.
See if you change the fro location a wee bit, do you have an opportunity to earn a lot more money. If so change your fro location. Also, see how to grow your trucking business in 8 steps?
This all comes down to being flexible while driving, do not have set routes in mind. Please try to reset your routes according to earnings (dollar per mile) from a potential route.
5.How much does the owner-operator makes per mile depends on the freight they haul.
The income that an owner-operator is likely to rake in depends on the freight/loads that they haul.
There are different truck loads you can ply such as the ones given below:
Van truckload owner: An independent owner operator hauling a van truckload can make $175,000 (solo) or $235,000 (team) in average annual income, or about $500-$750 (solo) or $800-$1,000 (team) each day.
Tanker owner-operators: hauling liquid truck loads or commodities can earn $210,000 or more in annual revenue.
Dray truck loads: Based on their location owner-operators will be able to do drays to and from the ports while averaging $100,000-$130,000 each year in revenue.
The earnings of owner-operators depend on the expenses they incur, there are many direct and indirect expenses:
6.There are 9 factors that affect what sort of expense you incur as an independent owner-operator/trucker
1. Buying a Semi Truck for owner operators:
If you want to purchase a used semi-truck you will have to expend between $ 45000 to $100,000. Many truck sellers will give a wiggle room to negotiate and reduce your upfront costs a bit.
If you are planning to buy a brand new semi-truck you will have to expend about $125,000 to $150,000.
2. Leasing a Semi Truck
If you as an owner-operator don’t have enough savings or leverage to pay for down payments. And you don’t want to take risk of owning and operating your truck. You can always lease your truck. You have to spend little or no money upfront for down payments.
You can expect to expend $1,600 to $2,500 each month, depending on the company you lease from and what type of truck you choose.
The documents owner-operators need to obtain differs from state to state. The below prices are estimates of what you can expect.
MC/DOT number: $300
Business registration / LLC fee: $50-$300
PrePass: $14.99 monthly
IRP Credential: $1,700 – based on the percentage of miles you operate in each state
IFTA Decal: $10
BOC-3 Form: $20-40 – necessary if doing interstate business
Most brokers/dispatchers/ carriers require owner-operators to be insured. Type of insurance includes occupational accident insurance and unladen/non-trucking bobtail insurance. Also, it’s recommended to have physical damage insurance
Your expenses on insurance may amount from $3000-$5000 a year or $250 to $400 per month on insurance.
Fuel is one of the biggest expenses of owning a truck for an average owner-operator. An average owner-operator spends $50,000 to $ 70,000 per annum or $4000 to $6000 each month. A fuel card is an essential tool to reduce fuel filling expenses for truckers.
You can make a lot of savings (about 37¢ to 45 ¢ on a gallon ) using TCS Fuel Card.
6. Booking Quality Freight:
Getting good and paying freight is one way to earn money per load hauled. There are various free and paid ways to get quality freight for your trucking business.
7. Truck maintenance and upkeep:
Your maintenance cost depends on if you have a new or second-hand truck. How much do the parts cost for the brand of truck you own? where do you get your maintenance from?
If you are working with a broker (if you have a fuel card or you have leased from a company) you can reduce your costs. These companies will have agreements/ programs with maintenance locations that will help you to offset your costs.
8. Food and Drinks
If an owner-operator wants to save money while driving he/she must invest in making food. Buying food from grocery shops can save many a penny vs. spending more on costly meals at restaurants.
You can invest in a refrigerator, a microwave and on groceries/fruit drinks, etc.
Owner-operators find it difficult to save up for quarterly tax deductions. It’s recommended to set aside 25 to 30 percent of your weekly income for quarterly tax deductions.
Both drivers and owner-operators can reduce tax burden but deduct expenses. Make a folder/file for all your expense bills/invoices etc. keep them in an orderly manner. Such invoices and bills add up to hundreds of dollars of tax deductions.
7. The below are some best practices in business for owner-operators/truckers that help you to avoid a tax surprise while taxes are due:
- Keep an account and put away 20-30% of your earnings in a Tax savings account (TSA). This means you do not have a scamper during the tax season to pay your due tax.
- Pay quarterly taxes and avoid a surprise tax bill from IRS
- Hire a tax agent/accountant they will know about specific deductions and they will know how to reduce your tax liability.
- Your tax prep at the end of the year will be easier if you use accounting software like Quickbooks for Self Employed. Track each and every one of your bills, expenses vouchers, etc. using the software and give access to your accountant.
- Also, in most states, you have to file an online annual company report and also renew your LLC or other corporate licensing. You could also be subject to other taxes.
- Your take-home pay/salary and even the final profit as an owner-operator depends on tax budgeted and other daily expenses.
Some of the tax deductions available for owner operators:
Vehicle expenses and maintenance costs –
You can deduct fuel, parts, repairs, and supplies, including floor mats, bungee cords, tarps, oil changes, jumper cables, cleaning products, CB maintenance, vehicle inspections, etc.
Travel expenses –
Expenses that drivers incur while on the road are deductible. This includes meals, lodging, and laundry, as well as toll booth and parking costs
Personal care items –
This includes items you’ll need to take care of yourself on the road, including sheets, blankets, grooming supplies, detergent, shaving supplies, toiletries, etc.
Below items also are deducible when doing your yearly tax:
Subscriptions to trade publications
Union and trade association dues
Licenses and regulatory fees
Liability insurance premiums
The amount an owner-operator truck drivers make a year differs according to expenses and deductions they incur. If as an owner-operator you have planned and saved up for such cuts or deductions you are on dry land.
Being prepared and saving up reduces rash surprises, whether it the maintenance bill, taxes, or insurance premium. Kept the worst and save your best to tackle surprises.