The big Question. This is what you really want to know to see if it’s worth all of the trouble, buying your own truck, becoming an accountant and sometimes a mechanic or troubleshooter. How much money does an owner operator truck driver make after expenses?
The answer to this big question is. As much a you want as long as it’s between minus fifty thousand and a couple hundred thousand.
To be more precise and less vague an non specialized running broker freight in a dry van or reefer you can make $70,000 after all expenses before taxes without working really hard. If you want to work really hard and get lucky along the way you can make $140,000 after expenses and before income taxes.
This is a risky business for those guys and gals that just jump in without first doing lots of research and learning how to become an owner operator.
You could make less than a company driver, many have even lost money and an O/O.
If you have not already started this research I would start with learning the steps before worrying about the net income you will take home.
I’ll repeat learn everything you can about this business before you buy a truck or worry about the money you’ll need to start up as an owner operator.
The better decisions you make in the beginning about the equipment you purchase or rent. The business set up, independent or leased to a carrier. What you get to keep after expenses depends to these very important but often over looked decisions.
For me keeping the risk of loosing money or being a slave to truck and trailer payments was much more important.
- 1 Learning to wear many different hats.
- 2 Owner operator pay per mile
- 3 Owner operator income and expenses
- 4 How much should you account for taxes as an owner operator?
Learning to wear many different hats.
Part of being self-employed is learning how to do many different jobs to run your own business. In my opinion becoming a really good accountant is probably the most important hat you will wear.
Is being an owner operator worth it?
I knew it was worth it for me anyway and it really had nothing to do with the money, REALLY! My main motivation was to be able to make my own decisions when I want to go home and for how long I’d like to stay there.
In short and I know it sounds corny.. Freedom. If you make well thought out good decisions you can make a great living while having lots of freedom.
Work Less AND Make about the same money as a well paid really hard running company driver or company leased equipment operator.
Owner operator pay per mile
This a terrible way to look at your gross pay. Just forget about pay per mile. Many experienced O/O’s will advise you to think in terms of a daily rate or gross per day.
Cost Per Mile – Know your expenses
This is probably the most important thing you can learn upfront and practice every day along the way. It cost me $1.38 per mile in the first six months of operation. This figure includes the purchase price of an old truck and every penny I spent to keep the business going from startup to six months out.
Without including the truck purchase my cost per mile in the same time frame is $1.12
The further you break this down the better you’ll understand, “know your numbers”.
Here are the real numbers of what is costs me to operate on a per mile basis.
44 cents per mile and rising along with fuel pump prices. You can control this with smart fuel purchases and getting better fuel economy. Mostly by getting better miles per gallon. I am currently at 5.9 MPG including reefer fuel cost.
Rates or fuel surcharge should also rise with fuel prices. If you can get better MPG you can profit more when pump prices are higher. I think the surcharge is based on 6 miles per gallon so the higher above that you get the more your profit can rise. If you are getting worse than 6 then you loose the higher pump prices go.
Variable Cost – Daily expenses
I use the Diesel Boss spreadsheet for my bookkeeping. I enter all of my income and expenses, numbers each time I come home. That’s every two to three weeks for me.
There are several sections or sheets where you enter different types of income and expenses.
All of my daily expenses which include repairs, tools, tolls, stuff I buy at Pilot truck stops – basically everything except for fuel and set monthly payments.
All of this stuff comes to 50 cents per mile.
This is probably the least reliable figure you can get from me or any one else because some O/O’s have huge monthly payments and others own all of their equipment free and clear.
My monthly expenses are only about 7 cents per mile.
On your tax return this is the Business Meals and Entertainment deduction. Based on the number of days I spend on the road at 80% of $63 per full day this deduction works out to about 11 cents per mile for me.
This deduction is a big benefit to O/O’s and 1099 drivers since we can take this right on our schedule c without having to itemize on our personal return form 1040.
It’s meant to account for our food and personal expenses while away from home. I don’t spend that much so the difference between you actual cost and the deduction amount is like free money and saves you on your taxes.
I track this as an expense and ignore grocery, restaurant and personal item expenses. Having a running total of this makes it easy to plug into Turbo Tax and the end of the year. It also gives me an idea of my net taxable income (bottom line on schedule C) as I go throughout the year.
Digging Deeper into expenses.
I also like to look at individual expense categories that total more that about $2,000 per year. Here are some real examples.
Repairs and Maintenance
I am currently spending about 20 cents per mile on repairs and PM services.
This is one of expenses that will decrease the longer they last you. You can even track drive tires and steer tires separately since they are usually purchased at different times.
I have not had to purchase steer tires yet. My drive tires have cost me 5 cents per mile so far. I expect that to go down based on 180,000 miles of use per set to 2 cents per mile.
I expect steer tires to cost me just under 1 penny per mile. So I can figure 3 cents per mile for all tractor tires.
Here are a few more I pulled from my spreadsheet.
Stuff I bought and installed on the truck. 5 cents per mile
Permits and fees
License plates and permits along with some filing fees. 4 cents per mile.
Another cost like tires that should decrease over time 2 1/2 CPM.
Dam these toll roads are expensive. I’ve been running 2 1/4 CPM. Chicago, Ohio, PA, and New Jersey more than usual lately. You can save a little with an IPASS or EZ Pass.
You can see By the amount of time we spent on expenses that having a good grasp of what you are going to spend comes before and controls how much you can make more than anything.
Owner operator income and expenses
So here is where it all comes together. Your income as an O/O, what you get to keep anyway, starts with the rate you get to the truck.
Rate to the truck (TTT)
If you are running as an independent that this is what you get from the broker or shipper if running direct. If you are leased to a carrier then this is the amount you get after the carrier takes their cut.
-Daily / Variable Expenses
Income after expenses
Now you can see why knowing your expenses comes first you start with them then add in what you want to make as a profit plus a cushion for new equipment. Some smart O/O’s even keep a separate account for equipment replacement and set aside a set amount every week or month just for this.
Actually I should have added in equipment replacement above as an expense, I may update this page with that later. I have been using a figure of $2,000 per month for this mainly to recoup my startup costs. Now that I have recouped startup costs I’ll continue to put this amount away for replacement of my truck and/or a trailer purchase.
How much should you account for taxes as an owner operator?
This is a loaded question since this depends on your deductions – number of dependents and so on. The best advice I can give you is to talk to an accountant.
If you have a large family with 3 or more kids and make less than $53,930 per year you may not owe any taxes. See this IRS table here.
If you plan on doing your own taxes. Keep a running total of your net taxable income and set aside about 25% to 30% of that figure if you are single or do not qualify for the earned income credit for qualifying families with children.
How does an owner operator pay taxes?
If you are going to owe taxes you should make quarterly tax payments to the IRS using form _______. If you are in your first year you’ll likely not owe much and can pay at the end of the year without penalty. After your first year you are required to make quarterly payments if you will owe federal income tax.
I have know Idea about state income taxes as I live in a state then does not have any.