Curious about owner-operator expense sheets? In this guide, it’s time to move beyond the basics of these important financial documents and dive into some of their benefits. Below, the FreightWaves Ratings team has answered important questions like “what can you write off as a owner-operator truck driver?” You will also see an examination of the most significant expenses that you will incur if you decide to pursue a career as an owner-operator driver.
Largest Owner-Operator Expenses
Before taking a closer look at the major expenses that owner-operators have to think about, let’s recap what owner-operator expense sheets are in the first place.
Owner-operator expense sheets are documents used to track all of an owner-operator’s expenses. These owner-operator expense sheets are available in many different formats.
People who prefer an old-school approach will often use physical owner-operator expense sheets and store their records in a log book or a binder. Alternatively, owner-operator expense sheets can be created using spreadsheet software like Microsoft Excel.
The most modern forms of owner operator expense sheets are available via cloud-based computer software. However, some of these solutions can be cost-prohibitive.
Regardless of which type of owner operator expense sheets you elect to use, you will need to track a number of expenses.
Purchasing or Leasing a Semi Truck
The largest financial obligation that you will deal with as an owner-operator is the cost of your truck. If you have the capital to do so, you can purchase a new or used semi truck outright.
Otherwise, you will need to finance your purchase or lease a truck. You should carefully consider all of your purchasing options so that you can choose the solution that best aligns with your budget.
Every owner-operator must also obtain their own truck insurance policy. Truck insurance rates vary based on the states in which you operate, your truck specifically and various other factors.
Your truck insurance will be a recurring monthly expense unless you elect to pay your premium at six- or twelve-month intervals. Going this route can save you money in the long run, as many insurers offer discounts for those who make lump-sum payments.
In addition to insurance, you will need to pay for various vehicle-related expenses, including registration and International Fuel Tax Agreement (IFTA) stickers.
These fees will vary month to month, so you will need to carefully track them in your owner-operator expense sheet. By tracking your expenses, you can avoid going above your monthly budget while also increasing your financial transparency.
No matter how well-maintained your vehicle is, it will eventually require repair and maintenance. These repair expenses can quickly add up, especially if you have to use after-hours or mobile repair services.
Owner-operators must obtain and maintain a Commercial Driver’s License (CDL). They may also need to obtain specialty certifications, depending on the type of freight they haul. The good news is that most CDLs only have to be renewed every five to eight years, so this expense is relatively small.
Most owner-operators spend thousands of dollars on diesel fuel every single month. As such, diesel fuel is one of the biggest expenses for most owner-operators. This expense often exceeds a driver’s monthly truck payment and other recurring obligations, so tracking fuel-related expenses is key.
Owner-operators will need to pay for annual or bi-annual inspections for their truck. These inspections can each cost a few hundred dollars. While this may seem negligible compared to some of the other financial obligations on your plate, it is critical to track all of these expenses as well for tax write-off purposes.
Modern owner-operators are required to undergo regular physicals and routine medical evaluations. Additionally, they must maintain a health insurance policy.
What Can You Write Off As a Owner-Operator Truck Driver?
Generally speaking, owner-operators can write off just about any expense that corresponds with something that is absolutely required for them to fulfill their work responsibilities.
Tools and Equipment
Depending on the type of freight that you haul, you might need to purchase tools and equipment, like straps, dollys or carts. All of these items can be written off come tax time, provided that you have documented your purchases on an owner-operator expense sheet.
Cell Phone Plans
As an owner-operator, you will need to stay in contact with dispatch companies, clients and co-workers. Since communicating with these parties is essential to your job, you can write off your monthly cell phone bill as well.
All truck maintenance expenses are eligible for write-offs, too. This coverage includes tires, oil changes, service calls and any other maintenance that you have to pay for in order to keep your wheels turning.
That’s right — you can write off every single gallon of diesel fuel that you purchase for your rig. Just make sure you carefully document all of your fuel purchases because you will need the records if you ever get audited.
Those mandatory health exams that truck drivers are responsible for are also considered business expenses. Keep track of any fees that you pay your physician, including copays and deductibles. This retention will help you take advantage of any write-offs when filing your taxes.
Do Owner-Operators Make a Lot After Expenses?
Owner-operators can make a solid income after all of the aforementioned expenses are taken into consideration. As with any small business, owner-operators will get back what they put into their jobs. Those who carefully track all of their expenses and have a genuine passion for their business venture also have the potential to do well for themselves.
Is Being an Owner Operator Worth It?
Working as an owner-operator can provide you with a level of freedom that you cannot experience from most other careers. You can see the country, choose which loads you haul, and make a healthy income all at once. With that being said, make sure you do your research and carefully weigh your options before making a final decision.
Should I Work for a Carrier or Become an Owner-Operator?
Working for a carrier provides stability and allows you to focus on one thing — operating your truck. On the other hand, owner-operators have to plan loads, keep up with vehicle maintenance, create owner-operator expense sheets and stay on top of many other responsibilities.
Even so, owner-operators also have a higher earning potential and more freedom. Therefore, you should consider the pros and cons of each career path before selecting the route that best aligns with your goals. Either way, it’s possible to enjoy a rewarding career as a professional truck driver when you know what to expect.
To calculate owner-operator expenses, you need to consider all costs associated with running the business, including fuel costs, truck payments, insurance premiums, maintenance and repair costs, tolls, permits and licenses, taxes, and any other operational expenses such as administrative costs or payment for services like load boards or factoring.
The profit margin for owner-operators can vary widely depending on factors like the specific operation, the type of freight, and the management of expenses, but generally, profit margins can range from 5% to 15% of gross revenue after accounting for all operating costs. However, individual results can be significantly higher or lower based on many factors.
An owner-operator should ideally pay himself a reasonable salary that aligns with industry standards for drivers, typically between $50,000 and $70,000 annually. However, the exact amount depends on business profits, operating costs, personal financial needs, and other factors.
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