Subcontracting Drivers

A 1099 is simply the tax form to report what you paid someone, and they'd have to be a contractor in order to be paid as a non-employee. Much different from a typical employee/employer situation where taxes are paid on the employee's behalf, contributions to social security, medicare, etc.

In common language, having a 1099 driver is just someone you contract to drive for you, you pay them gross wages, no taxes taken out, they handle their own taxes, and have no protections like workers comp and unemployment.

 

Bt the letter of the law you can not tell them when to report to work, or deliver for that matter.
Doing so makes them an employee not a contractor.
Much more to it than simply not paying taxes on them.
Do the research first.

 

The difference is that you should AVOID craigslist ads. There's a good reason why companies advertise there, and its not pretty.

 

All of that would depend on the contract you signed. I subcontract, not trucking, but I am responsible for my vehicle, gas, tools, and equipment, they are responsible for materials.

All of the lease/operator deals out there are 1099 deals.

 

IMHO, do as Ronin said and avoid Craig's List. I wouldn't go there or Yahoo with your computer, a 20' pole and a full body latex suit. These sites exist based on traffic and they don't care that the traffic is mostly pedophiles, perverts, spammers and scammers.

I would not tarnish my company by advertising there. Sure there is a 10% chance you can get a deal but there is a 90% chance you get the shaft. These are not the kind of odds I operate under. A few times a month a driver posts on this forum wanting to know how to get his money after he wasn't paid for 1 - 3 weeks of driving. Every one I have seen got the job on Craig's List.

On the issue of being an "independent contractor", while it is not inherently bad there are many pitfalls with this type of deal. If you do not completely understand the mechanics of this and all the ways you can lose with it, don't go near it. Go to the IRS website and search "independent contractor". Search this forum for "contractor", "independent contractor" and "1099". Learn everything about this before you try it.

Usually you are paid a percentage. It can be a percentage of net or gross. Often you have no way to know if your percentage was paid on a valid number. Sometimes you get a bigger percentage and have to pay fuel out of your money. You will have to get tax help to calculate your tax liability. Then you pay your own income taxes and Social Security each quarter. Usually you don't have health insurance, workmen's comp or unemployment.

Let's suppose a load pays $1600 and you get 17% of gross. That means you will be paid $272.00 (1600 * .17 = 272.00). Now let's assume you get 35% of net. The operating costs are $1008, so your pay will be $207.20 (1600 - 1008 = 592 * .35 = 207.20). Now let's assume you get 60% of gross and pay fuel. Your pay will be $307.00 (1600 * .60 = 960 - 653 = $307.00). These are not exact pay percentages or expense figures but they are loosely based on real numbers. So you see that it is hard to decide what is best and whether you are getting what you are supposed to.

Now let's assume you were paid by the mile on the above load. You deadheaded 140 miles to pickup the load and pull it 790 miles. That is 930 actual miles but you will be paid on some book miles that will be 10% less. You pay might be $284.58 (930 - 10% = 837 * .34 = 284.58 ).

Paying drivers on a 1099 is a very controversial issue. There are honest carriers that are paying this way and contractors that are making money doing this. It can provide incentive to make more money for both the carrier and the contractor. Your Social Security will be 13.3% of what you are paid. Income taxes will vary greatly but if you don't put back 20 - 25% for quarterly tax payments you will end up with tax problems.

 

The biggest reason that smaller companies use 1099 contractors is because they are fly by night and don't want the hassles and costs of actually having employees - they make more money, by a long shot, and swapping drivers in a truck just involves putting a different person's name on a paycheck.

Works great when you're totating 90% of your staff each month, like one company I had the pleasure of dealing with.