OPTION 2. Lease
This option allows you to take your equipment and lease under a different company/authority. This can help boost your chances of making an income fast, potentially lower your overhead, and potentially also lower your risk overall. Risk management is a HUGE part of success in the trucking industry, especially in car hauling. The biggest benefit I would say is that you have their back office to help with payroll, dispatching, and you can just focus on making money. This is a popular “starting” option too but it often costs a portion of your earnings. (Note leasing/working under another company usually will cost you 10% to 15% from your gross, but that includes a dispatcher which you will have to pay anyways).
Leasing under another Authority/Company will give you time to build history and connections for your own company.
Big trucking companies have a lot of drivers which is harder to manage, some of the drivers are careless and make mistakes, take actions that are not allowed by the brokers and are outlined in the Bill of Ladings and therefore the companies get banned from hauling for the brokers as a consequence of violating the terms of moving their freight (in our case cars). This causes these larger companies to miss out on a lot of good paying loads. So as you can see, option 2 has both its advantages and disadvantages. This is a good time to share that the biggest advantage of working with your own company is that you have TOTAL AND COMPLETE control over that process and in the future your own drivers. This can help you keep your authority in good standings with quality brokers on the load boards and across all of trucking should you decide to haul more freight other than cars, loads, and higher income on each load! Respecting broker's conditions and agreements is CRUCIAL to the success in your company.
Here's another personal example from myself, Driver X: This example is taken from when I was a dispatcher. I had a driver that I was working with that had to deliver a vehicle to a private customer. The driver said he struggled to find parking for his truck due to its length, tight roads, and limited access to the customers house. Because of this issue, he felt like his only option was to drive the vehicle off the trailer and to the customers home. The distance was about 1 mile. So he made the decision to drive the car to the customer because the customer agreed and he did this without talking to the broker or asking for permission. We will talk about the results and consequences of this driver's decision in a minute.
Start you'r thinking juices, What do you think? Was this a good idea? Was this a bad idea? Did the driver do his job correctly? But Driver X, what am I supposed to do if my truck and trailer won't fit and I'm forced into the same situation? Now that you're thinking about this driver's actions, Let's talk about what to do in situations like this.
Believe it or not, the above drivers situation is a common situation that can happen as often as a few times a week in some cases. But there is a right and a wrong way to handle this situation. This is a very real example that can happen at any time in our business. Before we find out what happened to my driver, let me help you understand brokers, customers, and trucking expectations. Brokers, just like us, care about their customers and their freight on your truck. They are paying you to move their loads but the load is their responsibility as they represent you and also the customer. Likewise we share the same relationship where when we deliver to the customer, we are representing ourselves and also our customer which is the broker and their company. Brokers also have a reputation and responsibility to not only us (the carrier), but their customers. They too, just like us, have tight regulations to follow. Oftentimes, communication is the best thing to do in situations like this. Brokers care ALOT about your communication. Not communicating issues with the load at pickup, during transport, or delivery with the broker would be the equivalent of me using the spare key to your house without telling you, napping in your bed, making a meal, then leaving without your permission. Imagine how upset you would be If I did that. Well, doing things the broker doesn’t allow or “clears” will be the quickest way to sink your business and get a bad reputation because there is a rating system on the load boards that rate brokers and carriers alike. This rating system based on your performance as a company can make or break your company, whether it’s your own authority, the company you lease under, or if you own a brokerage (owning a brokerage is NOT covered in this guide at all). Even if a customer says, “that’s ok with me” ALWAYS and I mean ALWAYS, confirm with the broker first before doing ANYTHING. Now, let's get back to what happened with my driver. He called the customer and the customer said they would be ok with the plan. He didn’t contact the broker at all in his situation. Even if the customer agreed for the driver to drive the car that 1 mile, our company was put in the DO NOT WORK WITH list, because it was prohibited by the broker according to the Bill of Lading/terms of hauling (which is our contract). Customer permission is NOT enough, make sure you get BOTH permissions especially from the broker with whom you have a contract. There are also many other cases where brokers will stop working with carriers because carriers do not respect brokers terms and conditions.
Here’s how I would personally handle the situation if I were this driver. I'd call the customer and share something like this:
“Hey customer, I noticed your drop off location won’t allow my truck and trailer to fit as the streets are too narrow. Would you be willing to meet me at ‘______ location’ since my truck will fit there? Or would you prefer I drive the car directly to you?
Version 1: “ok, you'll meet me at “_____ location” PERFECT! See you soon, thanks for your understanding and working with me”
Version 2: “You prefer me to drive the vehicle to you 1 mile? Ok, before I can do that, I will need to confirm with the broker that I can do that. I can’t do it without the broker's blessing. I feel it’s a good solution for this situation, yet the broker may feel there are other better options. Let me check back with you after contacting the broker. If I'm not able to drive you the vehicle, I expect the broker will help us find a drop off method that works. Thanks for your understanding. You’ll either hear back from me saying we have the green light from the broker, or you’ll hear from the broker discussing with you what our options for delivery are. I’ll wait for my instructions since I'm bound by the brokers contract on how I carry and deliver the load by strict guidelines. I want to ensure the load gets to you safely and I don't violate my contract with the broker so this way everyone is happy, and the load gets to you in the appropriate manner! Thanks for your understanding!”
This example with this driver is PERFECT. There is one more important point I’d like to make before we move on. Let's revisit the 1 mile distance the driver drove this customer's vehicle. As a company, or if you're leasing under another authority, you're that company's representative. It’s NOT a good idea to drive any vehicle ANY distance for ANY reason without EXPLICIT permission because it opens you up to SERIOUS liability. Let’s say you're operating under your authority or under another company's authority you're leased on with and you drive the vehicle. You never know what can happen. In the worst case scenario, imagine someone hitting you and on top of that they have no insurance and your customer's car is totalled. This makes you/the company COMPLETELY responsible for the damages. It can lead to SERIOUS violations on your commercial and personal records and also commercial and personal insurance. This could sink your business at ANY TIME and keep you from leasing under anyone else’s authority. Driving a vehicle in general ANY distance without EXPLICIT clearance and permission is not a good idea in any circumstances unless the broker blesses the “circumstantial situation”. This is why COMMUNICATION with the broker is CRUCIAL to success in this business and protecting yourself from these exact situations. Doing things like this driver exposes your company and can have MAJOR repercussions. Insurance companies will likely not cover the damages from our hypothetical example of the totaled vehicle because it could be considered as “negligence”. Again, disclaimer, I'm not an insurance agent or attorney. These are just my thoughts based on my experience, and logic. So let's learn from my drivers errors in judgment and NOT do things like this.
**Leasing Under a Company:** If you're working under a company, you'll lease your truck and trailer under their authority. They'll provide you with a DOT number, MC number, and dispatcher, handling the administrative side while you focus on driving. While some companies may require you to have cargo insurance, others may cover it, making it cheaper for you. Additionally, they may provide a fuel card and electronic logging device (ELD). In return, the company typically takes 10% to 15% of your gross earnings, possibly requiring a deposit. Leasing with a company reduces insurance costs and eliminates the need to deal with broker and load boards sign-ups. Also you are not building history for your own company.
NOTE: Whether operating under your own company or as a contractor for another entity, It is advisable to have sufficient funds to cover operational expenses, including fuel costs, for a minimum of two weeks.
OPTION 3: Work for another company
This option is pretty straight forward. Finding a job could mean one of several things in the trucking world. You can find an authority to work for as a company driver, whether this be a large fleet or small fleet. This is just a driver position. You can hop on facebook and sign up for car hauling groups and post that you're looking for work, or join our private Whatsapp group where you can get recommendations. This is typically how you can get started as just a driver for someone with equipment or a company looking to add drivers to their fleet! You get paid one of 2 ways, either as a W-2 Employee and you have taxes withheld by the company or you will get a 1099 NEC (non-employee compensation) at the end of the year. A 1099 tax form is typically where you're the one responsible for putting aside money for taxes.
Taxes (quick version):
In Option 1, your own authority, you will likely need to file a 1040 profit and loss statement.
In Option 2, you will likely receive a 1099- NEC from the company you're leased under.
In Option 3, you're likely going to get a W-2 traditional tax form or a 1099-NEC depending on the company you're working with.