Becoming an Owner Operator: The Business of Trucking
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At this point, we’ve covered the differences between independent contractors & owner operators and what qualifications you would need to obtain in order to become an owner operator. Now, it’s time to fully look at being an owner operator as a business opportunity.
The exciting part about becoming an owner operator is that it is your own business, therefore you get to make all of the decisions and take in all of the revenue earned on each load. The company can consist of just yourself and a truck, or a whole team of drivers operating trucks all around the area. What you decide to do with this operation is completely up to you, and that’s the beauty of it. However, to have a business requires you to actually set up the business.
In order to act as an owner operator, you’re going to need the correct classifications in order. It’s not the most thrilling thing in the world, but all owner operators need them to operate. There are many nuances to which business form is best based on your needs and the different ways each one is taxed, but for now we are going to scratch the surface and go over the basics of what every owner operator needs.
One way to form the business is filing as an LLC (limited liability company) to have it appropriately recognized without being personally liable for anything done within the operation. It’s not a difficult process, not too costly, and all that’s required is paperwork that’s filed with the state you live in or plan on doing business. You can also set up a sole proprietorship if you’re planning on being a single owner operator, but just know that you will be liable for the company’s debts and earnings.
If you choose to form an LLC, when it comes to the tax code, there are many options as to what you can incorporate as. Depending on how much income you plan on taking in, there are options to become a c-corporation or s-corporation. When it comes to taxes, the thing that all owner operators have in common is that they need to fill out and file 1099 forms every year with each company they do business with once tax season rolls around in order to account for those earnings.
Once you have completed these two processes, all of the legal qualifications for your company should be up and running!
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