Hauling business

[TinStar]

After 25 years in Corrections, I am finally retiring!!! I want to start my own hauling business. One truck and a trailer or two. my question is for other business owners. What type of business do you recommend? Corporation, LLC, Or Sole Proprietor. As I said, It will be just Me and one truck. Thanks.

 

[phantomusa]

Anytime you incorporate then trying to put your vehicles into the corporation everything costs more registration and insurance ect
Much cheaper to do as a private person
The upside of corporation is the protection it give your personal items like you home if your involved in a law suit the sueing person can only sue for corporate funds and properties and not your personal possessions

 

[Tuesdak]

Lots of rosy pictures painted out there from brokers and it's too late when you figure out is isn't. It's not all windshield time. Pretty competitive market with lots of discount freight and unloaded miles. You may wind up broke/bankrupt with a worn out pickup (repo'd) at the end of it. Maybe then you will have learned the ins and outs of the business. Hint: No money in RV hauling due to retirees doing it for fuel money if even that. Other freight or hauling cars is tough to stay under the max load for your truck/trailer combo. Then you are a moving target for cops/DOT, scales, inspections, hours of service logbooks, IRS paperwork and audits... (Claiming 100K on a vehicle in one year is a big audit flag. Why yes, I do have another vehicle for personal use so we will skip that calculation/proof.) You going through a broker for a DOT number or obtaining it yourself? Hotshot appears to be a worthwhile venture to explore. A better idea is simply a OTR truck driver as you will at least get a paycheck.

You would be money ahead to buy an RV and just travel the country at your own pace.

You need to know your CPM, cost per mile and your fixed daily operating cost. Then figure your dead head miles. After that you can see if the load is profitable. Lots of times the lack of a back haul makes a trip unprofitable. Then as the miles add up there is always something breaking down, tire blowing out, or some big rat like an Elk jumping in the road making for an expensive day. It can be done, but, the learning curve is expensive and steep. Hard work doesn't mean you are making money.

 

[phantomusa]

I did do hauling on a small scale but never made any money by the time i paid for all the costs i was in the red deep a big killer cost can be insurance, reciprocity fuel, and repairs the only saving grace was my truck a mack and trailer where paid for
I met alot of owner operators that had to live on the road to make any money [emoji383]
Ive had my CDL over 50 years but never wanted to drive anything but local runs i prefer to be home every nite and let a company pay me to drive for them
There are very few owner operators that last more then a few years without having a good customer base with good backhauls

 

[GAmes]

For a sole proprietor business there isn't any real benefit to forming an LLC or C corp until your profits get near 100k a year according to a trucking radio host I listen to. And the only reason is for income tax. Your assets won't be protected because you are both the owner and the driver. Despite what JDoremire said, I've enjoyed transporting trailers. It's a part time job that I work at my convenience. By leasing to a transport company there are no fixed costs like insurance, drug testing co-ops, and all the other expenses that are required by the FMCSA. The company I lease to pays all those expenses and also tolls, permits, and other ancillary costs. Income exceeds expenses by an acceptable margin for me, but mainly because I can do my own repairs and the 12 valve is so reliable. I estimate the job has paid for my truck about 7 times in the last 12 years in profits, but mainly I drive because I like to. Regardless of what you drive an owner/operator needs to know the fundamentals of business and be willing to provide a service. It isn't just starting the engine and pulling a load of stuff from point A to point B.

 

[brods]

There are a few good threads like this one where the topic of commercial hauling was discussed in detail: https://www.turbodieselregister.com...-haul-RV-s-commercially?p=1705615#post1705615 It is a bit dated, but will give you plenty to consider.

 

[Tuesdak]

For a sole proprietor business there isn't any real benefit to forming an LLC or C corp until your profits get near 100k a year according to a trucking radio host I listen to. And the only reason is for income tax. Your assets won't be protected because you are both the owner and the driver. Despite what JDoremire said, I've enjoyed transporting trailers. It's a part time job that I work at my convenience. By leasing to a transport company there are no fixed costs like insurance, drug testing co-ops, and all the other expenses that are required by the FMCSA. The company I lease to pays all those expenses and also tolls, permits, and other ancillary costs. Income exceeds expenses by an acceptable margin for me, but mainly because I can do my own repairs and the 12 valve is so reliable. I estimate the job has paid for my truck about 7 times in the last 12 years in profits, but mainly I drive because I like to. Regardless of what you drive an owner/operator needs to know the fundamentals of business and be willing to provide a service. It isn't just starting the engine and pulling a load of stuff from point A to point B.

I and others would love some deep insight as to how things work out to be profitable. It would save some of the newbies a small fortune. I didn't say it wasn't enjoyable. However there is a bunch of paperwork involved that isn't fun or "just driving". The linked 2007 thread the member brods posted is still true about deadhead and other work like hot shot and hauling cars being more profitable.

Some of my insight into it... Today you can't show up with a antique 12 valve and expect to be put to work hauling RV's. No.... They (the major RV brokers) want you to show up with a late model 5 years old or less pickup that requires a ~$700 a month payment. We started in 2008, had one good paycheck, and the Great Depression V2.0 hit. Diesel hit $5.00 a gal. None of the factory to dealer work was available. We wound up hauling closed dealer to other dealers, Dealers to auction, Repo yards to auction, auction to used RV dealers, some fire department trailers: everything but New factory to dealer. Zero backhauls made lots of red ink. I kinda hate used old RV tires as we left plenty of them on the road in small chunks.

We stepped out of the RV hauling into hauling auto parts and tires around the state with a cargo trailer. Kinda like UPS for auto parts, but, not hot shot. This allowed us to keep the truck, but, it was making less than minimum wage. Our parts broker couldn't pay us for two weeks so there went the truck back to the bank. Surprisingly our broker did pay up so we purchased an older 1993 6.5TD cash. Bank can't take that away. We went back to hauling parts for them, but, the fuel economy of the Asthma Attack turbo GM used made for miserable fuel economy 7.5MPG with the grades we have in AZ. Further it was under powered slow pushing DOT hours of service limits. Regardless the old 6.5 went to work because another driver blew a $1000 ECM on his Dodge truck and couldn't afford to fix it. One blown engine later we gave it up when it was totaled after hitting an elk. After rebuilding the truck we made some money hot shotting for the same parts broker now and then and hauling RV's from auction to a local used RV dealer till that small time RV broker went under and neglected to pay us as well as the rest of it's drivers. Later I got to shove an IRS audit up the auditors where the sun doesn't shine and walked away still writing off rebuilding and hot rodding the 1993. I am left with a pickup that has over 1/4 million miles, fresh 6.2 hybrid 6.5 engine, large turbo, Yank Stall, rebuilt front end, and I am missing the shirt off my back like a lot of people are from 2008's Great Depression V2.0.

As far as RV hauling there are some secrets to it. The biggest is "Hook and Tow": where you have a flat bed MD truck and haul a small trailer on the bed and tow another. The recruiters don't say s#it about this option. We only found out about it by making two trips to finish delivering loads when a hook and tow driver blew their clutch and the broker didn't give them time to fix it. Ugly situation to be blindsided with when we showed up. Hook and Tow pays slightly more for the same single digit MPG. Again RV hauling isn't what they are selling it as and I suggest other ways to make some better money OTR. I haven't seen a peep about the hidden gotcha cost the ComData card the big RV brokers use to pay you. The ComData card takes a cut of your (profit... wrong word: pay) for almost every transaction.

Far as I am concerned a overpriced new or used diesel pickup is the wrong tool for the job. MD trucks are cheaper to buy used and have longer lasting 19.5" or so tires out of the gate. I am not talking about overpriced Duramax, RAM, etc. 4500/5500 pickup look alike, but, a Frightliner or similar used from a rental company.

 

[phantomusa]

I have a older Mack 1990 with a Cat motor and 13 speed transmission even put a freightliner rear cutoff with air ride on rears with 3:38 gears and tall rubber 24.5 so i got good mileage and higher top speed and i bought a old car hauler trailer my best money job was to haul wrecked cars from auction to the Salvage yards
That was a money maker cause i would clear 1.00 per mile profit after my costs and many times i had backhauls waiting with repaired cars going to auction
I found many big salvage yards had body shops that would repair late model wrecked cars and sell them at auction it was a good deal until some SOB came in and under bid me sorry to say that only lasted 9 months till he was outta business the salvage yards called me to come back but I decided not to
Pappy

 

[GAmes]

I and others would love some deep insight as to how things work out to be profitable. It would save some of the newbies a small fortune.

I started out with an advantage. No mortgage, no kids at home, no truck, car or boat payments and a monthly retirement check. As a result I could pick and choose when I worked and could link loads to keep dead head miles to a minimum. If I'm not making money neither is the company so finding a follow on load is important to them too. The company I lease to doesn't limit itself to new RVs, we pull anything with a hitch, new, privately owned, repos to the auction, sold units of auctions to dealers, boats, specialty trailers, cargo trailers, you name it. Since I'm 5' 6" and weigh 170 I fit comfortably in the bed I fabricate and installed in the back of the cab after removing the rear seat. I only rent motel rooms if it is really hot or really cold. My time in the Army conditioned me to not require three hot meals a day so food costs are low. In addition, I don't mind being on the road for two, three or more weeks at a time as long as it doesn't interfere with my fishing schedule. A bonus is a couple of rewards credit cards that provide me with free, tax free money as long as they are paid in full each month. All my expenses go on them. I installed a 50 gallon aux tank in the bed that allows me to skip the high fuel tax states and even going as far north as Edmonton I rarely have to buy fuel in Canada. I also shop for fuel prices on the internet and seldom use the chain truck stops. I've see as much as a 40 cent per gallon difference between a Pilot and a Fred Mayer about 40 miles away. My fuel cost this year is less than 18 cents per mile mostly because I've limited my trips this year for other priorities. My unloaded (deadhead miles) has increased to 55% compared to 41% in 2014. 27 cents per mile overall then.
As far as new trucks being required, that isn't a universal thing. The office manager (who hires and fires) told me not long ago that she prefers the older trucks because they are more dependable. Linking drivers to pick up a trailer from a broke down truck location is a pain and isn't profitable for anyone. Also, at the end of the year 2000 YM and newer trucks will require an electronic log device. I can still use paper logs, or the smart phone app that I have.

The last thing I want to mention is the silliness of worrying about the pay per mile. What is important is the profit per day. The "Don't haul cheap freight" stickers on trucks is stupid. Sitting at a truck stop or deadheading to avoid a $1 per mile boat that will take you to a $1.35 5th wheel is shooting yourself in the foot.

 

[jhenderson]

X2 on incorporating or an LLC. You are the company. Incorporating protects you personally from acts performed on your behalf by your employees. Without any employees the corporate shield does little or nothing to protect you. The only exception would be if you were running multiple businesses. A parent company and individual corporations would protect one business from claims against another. This was advice given to me by my accountant many years ago.