Updated: Oct 7
As an owner-operator, you’re a small business owner. That means you can’t just focus on how much money you’re making, you also have to focus on how much money you’re spending.
Owner-Operators have to deal with many of the same commonly-occurring business expenses. Understanding these expenses, and figuring out how to minimize the amount of money coming out of your pocket, is an important task for any business owner. ATBS is here to help, as we identify five of the biggest expenses faced by owner-operators.
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Fuel costs are the largest expense for most owner-operators. On average, you may spend between $30,000 and $60,000 a year on fuel. The easiest way to figure out how much you can expect to spend on fuel is by calculating your truck’s average cost per mile. This can be calculated by dividing your average MPG by the fuel cost per gallon and then multiplying that number by the number of miles you expect to drive.
The best way to save on fuel is to find the “sweet spot” your engine runs. The “sweet spot” is the most efficient RPM to run the engine. Contact your dealer to find the specifics for your engine in order to identify the “sweet spot”.
Your truck is the second biggest expense you’ll face as an owner-operator. Truck expenses include the truck payment, maintenance, and tires. Even if your truck is completely paid off, maintenance and tire costs are still enough to be your second biggest expense. On average, maintenance is around 10% of total expenses.
The best way to manage your maintenance is to overestimate how much money you will need for truck repairs and put that money into a dedicated maintenance account. Tire expenses will vary between $1,000 and $4,000 each time they are replaced. Before buying tires, take into account the cost of the tires as well as their life expectancy.
Insurance on a single truck typically starts at around $3,000 for a leased owner-operator and $20,000 for an owner-operator with their own authority. Insurance expenses can rise depending on how extensive the coverage is. Some of the different types of insurance that are typically required include bobtail, occupational accident, and physical damage. On top of your truck insurance, you will also need health insurance, which averages around $3,400 per year.
Insurance is an expense that can vary significantly, depending on how much you want to pay. However, paying less for insurance usually means a higher deductible, which comes with a greater risk if an accident were to occur. Our friends at TrueNorth see insurance “as an opportunity; an opportunity to protect what you felt was an important investment”.
Food and Drink
Food and drink is a large expense that owner-operators might not expect. Eating out at restaurants every day can add up quickly. However, owner-operators are given a tax deduction known as Per Diem. As of October 1, 2021, the IRS allows you to deduct 80% of $69, or $55.20, every full day you’re on the road.
Even though these costs are tax deductible, it is money you still have to spend. The easiest way to lower your food and drink costs is to buy food at the grocery store and keep it cold in your truck. The cost of groceries is a lot cheaper and healthier than eating out at restaurants.
Running a business is difficult. It’s even harder when you’re on the road driving all day. Having someone that can help you run the business side of trucking can be a big asset. It can also be a tax deduction. Paying a company to help you with your accounting and bookkeeping allows you to focus on what you love...driving your truck!
Over 150,000 owner-operators have made the choice to hire ATBS over the past 20 years. We offer a variety of services including accounting, bookkeeping, and tax preparation. We also offer unlimited business consulting for our RumbleStrip Professional clients. A dedicated business consultant will help you keep your business “between the lines,” just like rumble strips on the highway. If you’d like to learn more about ATBS services or want to get started today, give us a call at 866-920-2827.