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Generally, there are two types of truck drivers. Company drivers are those who are employed by a trucking company. The company owns the truck, dictates the routes, and pays for all overhead costs. On the other hand, Owner-operators both own and operate their trucks. Owner-operators are their own bosses; they pick their routes and take in all the revenue themselves.

Although there are many benefits to being an owner-operator, there are also challenges that must be considered. An owner-operator has to cover all the expenses, and they are responsible for organizing the sources of their revenue. Still, it can be both a financially and mentally rewarding experience, which is why nearly half of all truck drivers are owner-operators.

The Differences Between Owner-Operator and Company Driver Salaries

Company drivers have their expenses covered by their employers. This includes overhead like maintenance on the vehicles, taxes paid, and health insurance. Some of these expenses are taken from a company driver’s paycheck, and in the end, the company takes a share of whatever revenue the driver pulls in.

Meanwhile, Owner-operators have to pay their own expenses out of their gross income. While owner-operators can make a gross income of up to $220,000, their expenses result in a net income of around $45,000 to $80,000 a year. Therefore it is crucial for owner-operators to maximize revenue while minimizing expenses to achieve the highest net income possible.

Owner-operator expenses include the payment and maintenance of their truck, taxes on revenue, fees, and other administrative costs. However, owner-operators are also able to control their routes. They get to decide their business partners, the cargo they will ship, and their schedules. With this freedom in mind, owner-operators have a higher earning potential.

In short, while company drivers can receive a steady paycheck, owner-operators play a game of higher risk and higher reward. An owner-operator with a solid business plan, financial tools, and a drive for independence can see a lot of success in the role.

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How to Make an Owner-Operator Trucking Business Plan

Those who wish to be successful owner-operators must first put a solid business plan into place. This plan will act as the guiding principle while an owner-operator seeks high-paying jobs and aims to keep costs low.

An owner-operator trucking business plan should include the goals of endeavor, the specifics of the type of trucking performed, expected fixed and variable costs, potential business partners, and predicted trajectories of income. These should be organized in a logical manner so that the owner-operator can effectively communicate their needs in the line of work.

Running a self-owned business is never easy, so a business plan will act as the backbone for owner-operators against the inevitable challenges ahead, such as loss of equipment or cargo, unexpected health problems, or dealing with competition.

It is also a good idea for any owner-operator to occasionally revise their business plan as they experience new developments.

How Owner-Operators Make Money

Owner-operators have two different options in which they get paid. The first is through a percentage of the load. An owner-operator can take anywhere between 20% and 80% of the revenue of a load. The second option for payment is through mileage. In this case, the owner-operator is paid a set amount based on the miles driven.

Both options have their advantages and disadvantages. Payment through a percentage of the load can be quite lucrative if the cargo shipped is highly valuable. However, if the cargo is low in value, then the owner-operator sees less revenue. Meanwhile, payment through mileage is more consistent and predictable, but the driver is not rewarded for shipping a valuable load.

Sometimes an owner-operator does not have a choice on the payment type because it is determined by the contact the owner-operator has with the other parties involved. However, if an owner-operator does have a choice, then they must decide which payment option is best for them.

If you are an owner-operator and you are good at budgeting and managing cash flow, then a percentage of the load might be a good choice for payment since it offers the potential for higher revenues. However, if you need a more consistent stream of revenue, for example, because you have a family to consider, then payment through mileage could be the better option.

Expenses for Owner-Operators

Regardless of the payment option, the key for any owner-operator is to minimize their expenses. Although owner-operators can take in large amounts of revenue, it will mean nothing if their expenses nullify most gains.

Fixed costs and variable costs are the two types of expenses owner-operators must consider. The most obvious fixed cost is the payment for a truck, either in full ownership or as a lease. This includes depreciation on the truck or lease payment installments. Other fixed costs can include administrative fees paid to state agencies and insurance payments.

Many expenses for owner-operators are variable costs due to the dynamic nature of the profession. These include maintenance on the truck, fuel costs, and taxes. Truck maintenance, in particular, can vary wildly depending on the condition of the vehicle, which is why it is crucial for owner-operators to be vigilant about their upkeep.

Financial Tools For Owner-Operators

Expenses can be difficult to manage for any business, but owner-operators do not have to deal with the problems alone. There are many tools and resources an owner-operator can use to efficiently handle their expenses.

The most important thing an owner-operator can do is hire an accountant. Taxes can be extremely tricky, and tax mistakes can end up costing an owner-operator more in the long run. An accountant becomes an investment to avoid this problem. An accountant can also help maximize deductions, thereby saving an owner-operator more money.

Owner-operators should also consider investing in accounting software to track expenses accurately. This will help throughout the year to give the owner-operator an accurate picture of the situation. Data pulled from the software, such as business expenses, can also be used by the accountant when deducting taxes.

Owner-Operator Take Home Pay Frequently Asked Questions

  1. How much does an owner-operator make?

    Most owner-operators can make anywhere between $100,00 and $220,000. The average income for an owner-operator comes out to around $140,000. However, it should be noted that this does not take expenses into account.

  2. How much profit does an owner-operator make?

    After expenses, an owner-operator’s net income is generally between $45,000 to $80,000 a year.

  3. Is it worth being an owner-operator?

    Being an owner-operator can totally be worth it as long as you are willing to make certain concessions. Owner-operators have more freedom and control over their careers. However, they also have to pay for all the expenses that a company would otherwise cover for a company driver.

By - Chris Kolmar

Chris Kolmar is a co-founder of Zippia and the editor-in-chief of the Zippia career advice blog. He has hired over 50 people in his career, been hired five times, and wants to help you land your next job.

His research has been featured on the New York Times, Thrillist, VOX, The Atlantic, and a host of local news. More recently, he's been quoted on USA Today, BusinessInsider, and CNBC.