Teach me about 1099 and lease purchase

Set 35% aside to pay your taxes.

 

Even at an honest trucking company that hires you to do 1099, you need to save 25-30% of each dollar you are "paid" to pay your taxes (self-employment, income, state income, etc). You should pay your federal taxes quarterly, but you can pay them next April 15 if you don't mind paying a penalty for not paying them quarterly. You will not be covered by worker's comp or have health insurance unless you buy them for yourself.

You will sing a contract that obligates you to pay the xepenses of the truck whether you made money that week or not. Lease purchase payments are your obligation, but the trucking company is NOT obligated to give you enough work to make those payments.

 

The lease purchase programs seem like a scam. Most of these companies charge excessive lease fees and pay barely more than a company driver after expenses. After paying your share of the taxes, I'd be surprised if you make more than a company driver. If you want benefits, you'll have to pay for them out of your pocket. You can't take your truck and work anywhere else. If they want your truck to be governed at a certain speed, painted a certain color, or whatever other rules they want to impose, then you have to follow their rules. You are basically an employee, except they don't have the burden and liabilities associated with it.

They are also in charge of what you make. They are not obligated to give you work. They can keep you strung along until the end of your lease, and then starve you out so that they can repossess the truck. I personally know of one person that this happened to. My advice is to find a different line of work. Driving a truck is not the only way to make a living.

 

Save every receipt. Hire a CPA. Form an LLC before you start, if possible. Make sure its a legit CPA familiar with the transportation industry so you aren't caught by surprise later on. After the first year, you will be required to send quarterly estimated tax payments in to the IRS, the CPA will assist you with those calculations as well.

Set aside money for taxes... the 35% is a good guess, but that's 35% after deductible expenses (fuel, per diem, equipment, lease, insurance, etc.) So 35% of your settlement less $350/week is a good ballpark (ex: $2300 settlement after expenses, less $300 = $35% of 2,000, or $700 in the savings account... leaving you $1300 take home. Best case, you now have extra savings for breakdowns the next year, worst case, you only owe a few thousand at tax time (instead of tens of thousands).

As for trucks, you don't need anything flashy. Find the best Freightliner Cascadia midroof with a DD15, DT12, and aero package that you can. The taller the rears, the better. We're talking low-2s here. APU if possible so you aren't burning all your profits when parked. These units can average 8.5-9 mpg loaded when driven properly.

 

Biggest reason for that? Idling. If you have to idle one, bring the RPM up to 900 using the dash controls.

And definitely form the LLC. Trust me. Protect yourself.

 

get yourself an otr performance plug and play tool.

Can force regen, and such, get the one that’ll bluetooth to phone,$200 or so for machine line $500/year.

One good regen and clearing of codes will save that from downtime and shop

 

The recruiter is giving advice that works best for the trucking company. As a 1099, if you don't protect your interest nobody will protect it. Tons of first year lease-operators fail. One reason is they spend every dollar they are given from the trucking company like it is from a W-2 paycheck and then the next April 15 they learn they owe the IRS for a year's worth of income. MOST of the YouTube videos of some newbie signing a lease-purchase contract show the truck driver living large for a few months and then poof they stop posting. A $15,000 bill from the IRS can really take all of the fun out of pretending to run a business. The tax laws and the regulations apply to you even if you did not know about them. The IRS seldom gives a discount for "not knowing."