7 Must-Know Owner Operator Expenses – A Matrack Guide
AndrewFebruary 2, 2023Owner Operator

7 Must-Know Owner Operator Expenses – A Matrack Guide

For people who value freedom and flexibility in their professions, a career in trucking is an intriguing option. Truck drivers come in many shapes and sizes, from young adults just out of high school to veterans or elderly retirees. In this line of work, you can choose between driving for a company or owning and managing your vehicle.

Why be an Owner Operator?

The main draw to working as an owner-operator is the feeling of independence and ownership. Owning a truck brings a sense of fulfillment that is indescribable. Compared to company drivers, owner-operators make more money. As a result of the assumed risk, each load transported generates more revenue. There are many advantages to being an owner-operator, but for it to be successful, running costs must be accounted for and closely maintained.

Following are the seven must-know expenses that every owner-operator needs to know:

Fuel

Fuel is the most critical of all expenses that need monitoring, as it is the lifeline of every automobile. The volatility and fluctuations in global oil prices are directly related to your fleet expenses. As per industry estimates, annual fuel spending averages between $30,000 to $70,000. Fuel savings can be attained by continuing to practice safe driving practices like:

Repair and Maintenance

Regular maintenance is necessary to keep your fleet up and running. The Federal Motor Carrier Safety Administration (FMCSA) stipulates one periodic maintenance in 12 months. Maintenance-related expenses should be factored in as variable expenses and not ignored. What first seems like a little problem may flare up into something big and burn a hole in your pocket.

The suggested time of basic service is between 10,000 to 20,000 miles per industry standards. It involves the inspection of your truck to ensure proper working. The following are some guidelines for truck maintenance:

Clean oil lubricates and protects your truck engine. Engine oil can become contaminated with dust, dirt, and debris from the engine and environment and negatively affect its performance. 

You should routinely check the engine coolant, power steering fluid, windscreen washer fluid, and brake fluid in addition to the engine oil.

All four tires on your truck require routine tire rotation to prevent the tire tread from wearing down. Routine tire rotation increases the life of your tires. Lowering vibrations can also increase fuel efficiency and lengthen the lifespan of your truck’s suspension parts.

Licenses & Permits

These are fixed expenses and can be factored into your costs well in advance. The only way of incurring additional cost on licenses & permits are due to delays in procurement or failure to obtain them. To operate a commercial trucking company, the business must be registered with FMCSA and obtain a USDOT number.

Following are the registration & renewal costs incurred:

After commencing operations, you need to update your company information to FMCSA every two years about the following:

Additional state and federal permits and licenses that your business might need are:

Owner Operator Expenses
Source : FreightWaves

Insurance

The Insurance cost for an owner-operator with their authority varies from $9,000 to $12,000 for the year. The insurance cost depends on the extent of coverage. Higher coverage will incur higher premiums. Owner-operators should consider the following insurance coverages:

One of the easiest methods to reduce the cost of owner-operator truck insurance is to compare prices. Make sure you are comparing comparable coverages when comparing rates. When it’s renewal time, look for various coverages if your current insurance is too expensive. Working with a trustworthy broker who can obtain quotes from other businesses for you to compare is the best approach to compare costs.

Taxes

An owner-operator or truck driver must pay taxes every three months (corporate, fuel, and road usage).

Types of taxes applicable are as follows:

According to the Internal Revenue Service (IRS), the self-employment tax rate is 15.3% (12.4% for social security and 2.9% for medicare)

You are responsible for estimating and paying state income tax and federal tax.

Estimated deductions & record keeping

Accurately estimating your profits will help you avoid paying more in taxes. The IRS will presume you owe taxes if you fail to claim the appropriate deductions or even file your tax return. The amount they would then determine will be substantially larger.

You can compute your net profit using the following formula:

Some Tax Deductions for Owner-Operators include

Brokerage

It is the cost associated with finding work for your business. Freight brokers having a network of shippers charge a commission to get you the hauls. 10% to 20% of each load’s gross margin goes toward this commission fee.

Using the services of a broker reduces the time spent looking for work and paperwork. Nurturing a good relationship with the broker will ensure continuous workflow and fewer hassles and prove beneficial to both in the future.

Food & Drinks

Although necessary, food and drink expenses can be difficult. Food expenses are high and quickly add up without your knowledge. Eating at roadside diners or purchasing expensive snacks while traveling will increase your costs. It is far more beneficial and cost-effective to buy things from a nearby grocery store. Buy a tiny refrigerator and a microwave to store and rapidly reheat food while on the go. Make your coffee. It is advisable to keep a journal and keep track of your food and drink expenses.

The establishment of partnerships is crucial to the success of any commercial endeavor. Such a partner in the context of a truck owner-operator will be a reputable fleet management system. You may advance your company with a reliable and powerful fleet management solution. With the aid of the Matrack fleet management system, which is the ideal partner, your goal of becoming a successful owner-operator can come true.

Following GPS tracking devices of the Matrack fleet management system have all the requisite features needed by any owner-operator.

  1. XT-2469 OBD Plug-In.
  2. XT-2169-Hardware.
  3. MA-HW Silver Weatherproof Hardware.

Following is a brief of the features offered by the Matrack fleet management system:

Exhaustive and easy-to-read reports. Reports include details like engine status, street address, coordinates, battery level, mileage, speed, and direction. With the availability of critical information, you will be in a better position to plan your routes.

The alert system comprises settings like ignition on/off, low battery, tow alerts, and speeding. Alerts are customizable according to your requirements.

Provision of setting up ten geofences per account. These virtual boundaries protect your asset. For any geofence breach, you will be alerted immediately.

It is an organizer that prioritizes the jobs, assigns deliveries, and automatically maps out the optimal routes for each job. It will optimize the fuel efficiency of your truck.

Generate IFTA fuel tax reports, a regulatory requirement, for interstate commercial vehicles. 

Track in-transit deliveries of your clients.

System alerts for oil changes, tire rotations, or anytime vehicle maintenance is needed.

Matrack has tied up with Blink roadside assistance to provide you with heavily discounted rates on responsive emergency services.

The OBD plug-in device has a unique function to read and monitor your vehicle’s diagnostics disposition. You can utilize this function to get free diagnostics reports for any problems you may have with your vehicle. This will help in expediting your repairs.

Conclusion

Owner-operators need to be astute in analyzing what is best for their business. In this kind of business model, the cost of doing business is huge as the owner-operator needs to invest in trucks and equipment. Therefore, it is imperative to do thorough research before you start the business. The clarity in vision will translate to the smooth running of your business and benefit you in the long term.

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Miles

Inside Sales Rep

Hi, my name is Miles. Please let me know if I can help you find the solution that best fits your needs.

miles@matrackinc.com
(925) 230-4530

I am here to help. Let me know if you have any questions.

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