Owner Operator vs. Independent Contractor: Where the differences lie
We see the terms “owner operator” and “independent contractor” get thrown around in trucking a lot. They both describe truck drivers who are independent and are not legally employed by one carrier company in particular. These terms also tend to be used interchangeably, but that’s not always correct. All owner operators are independent contractors, but there are key distinctions that make some truck drivers owner operators, and others just independent contractors.
If you’re an owner operator, you’re an independent contractor who gets to choose who to work with, get the W-9 from all companies you work with, own your own equipment, etc. Basically, an owner operator is an independent contractor with a business attached to their name.
However, you can be an independent contractor in trucking without being an owner operator. Some drivers choose to lease a vehicle from a larger company and operate under their authority without having to become a full-fledged owner operator. Instead of setting up their own carrier company, a driver would be running with another company and using that entity’s authority.
It’s very important to make a distinction between the two because one term (owner operator) is referring to a business owner, while another (independent contractor) is referring to someone that is not an employee and works independently, but in theory they could be leased under an owner operator or larger carrier company.
The biggest differentiator between the two is who owns the operating authority. Authority is a designation that every company needs in order to transport goods in the United States. Owner operators have their own authority so that anyone in their business can successfully and legally transport freight. Not all independent contractors have their own authority, so that’s when they look to other companies to work with.
Why do some independent contractors choose not to become owner operators? There are additional expenses, such as insurance, taxes, and equipment expenses. However, as an owner operator, you get to keep 100% of the revenue generated from each load, whereas independent contractors working for other carriers will almost always have a cut taken out of their earnings.
As long as you are operating under interstate authority, have equipment and insurance, you can use the DrayNow app to find loads and haul intermodal freight. However, if you’re an independent contractor with a small carrier company, you would have to check with them to make sure everything is good to go, and they might add a dispatcher to assign you loads.
As an owner operator, you will have full autonomy to find your own freight, make 100% of the earnings, be your own boss and determine your destiny in the world of trucking.
To see the next post in this series on obtaining authority & insurance, click the link here!
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