[Rev.Vassago]

Originally Posted by GMAN

That is why it is good to pay yourself a flat salary. If you only want to earn a minimum amount to meet household expenses then it is easy to simply pay yourself $500, $1,000 or whatever you need to cover your household expenses each week or month. It makes it cleaner to just pay yourself a salary if that is what you want to do.

Which is a fixed expense.

Household expenses are not a part of your business expenses.

But a salary is. My salary is equal to my household expenses. They are one in the same. Now we're simply arguing about what it is called.

If that were the case then you could write all of your household expenses off your taxes.

Accounting for tax purposes and accounting for purposes of determining cost of operation are two completely different things. A sole proprietor can't write off wages on his taxes. I suppose there's no reason to include them then?

[GMAN]

If you pay yourself a flat salary each week or month then it would be considered a fixed expense. If you pay yourself on mileage or percentage then it will be variable since it will change from one load to another.

A sole proprietor cannot write any money off that he pays to himself since any money over and above actual expenses are considered profit. Do you calculate your wages or profit in your operating costs? I believe that wages should be considered in your operating cost estimates. I think the original poster was hoping we could offer her a simple means of calculating operating costs.

[fl_char]

Just want to thank GMan and the Rev and all others...
I decided to use all my fixed expenses that I have, either I run the truck or not...I use my monthy expense and divide that by 26 which gives me a daily figure what it cost daily.. Basically I need atleast 1 day off a week to reset my hours so I find this way better..
As far as fuel I use 625 miles a day and use 5.5 mpg get my cost their...So I have 1 section that tells me what it cost per day to run the truck or not and the other with the fuel added in...
Once again thank yall

Charlene

[Rev.Vassago]

Originally Posted by GMAN

A sole proprietor cannot write any money off that he pays to himself since any money over and above actual expenses are considered profit. Do you calculate your wages or profit in your operating costs? I believe that wages should be considered in your operating cost estimates.

I absolutely include them. But you brought the whole "tax purposes" thing as the basis for what can and can't be included into it, and wages cannot be included doing tax accounting, but are still included in calculations for cost of operation.

I think the original poster was hoping we could offer her a simple means of calculating operating costs.

Both methods are simple. I just think my method provides a more accurate bottom line.

[GMAN]

Originally Posted by fl_char

Just want to thank GMan and the Rev and all others...
I decided to use all my fixed expenses that I have, either I run the truck or not...I use my monthy expense and divide that by 26 which gives me a daily figure what it cost daily.. Basically I need atleast 1 day off a week to reset my hours so I find this way better..
As far as fuel I use 625 miles a day and use 5.5 mpg get my cost their...So I have 1 section that tells me what it cost per day to run the truck or not and the other with the fuel added in...
Once again thank yall

Charlene

I think using 5.5 mpg is a reasonable figure to use. However, it is doubtful that you will average 625 miles per day for the entire year, especially with the current economy, unless you are running coast to coast. But you need to start somewhere. One thing that I find helpful with my mpg is using a quarterly average. For instance, I used to run east to west most of the time. My fuel mileage has been over 7.1 and as low as 4.99 on one truck. My quarterly average is around 6.29. That is a more accurate figure since it covers a wider time frame. You can make adjustments as you go along. I would either use a spreadsheet or one of the trucking specific software packages to help keep track of expenses. You can purchase most of them for less than $200. Most of the trucking software will automatically break down your costs by the mile which can help you easily check your profit on each load and year to date. Starting out there are a number of unknowns. As you move forward you will have real numbers and a better picture or your operating costs. Keep in mind that everyone runs a slightly different operation. Rev and I may disagree on some aspects of how to do these calculations, but in the end there may be little difference in the actual numbers. It might be good at some point to compare the two side by side. Good luck. Keep us posted on your progress.

[Rev.Vassago]

Originally Posted by GMAN

Rev and I may disagree on some aspects of how to do these calculations, but in the end there may be little difference in the actual numbers. It might be good at some point to compare the two side by side.

No, there really isn't much difference in the numbers as long as things stay constant. But in the trucking industry, consistency is a pipe dream. What happened a week ago is not guaranteed to happen tomorrow.

[GMAN]

That is very true. Change in this business seems to occur daily.

[YerDaddy]

So if I I have met my fixed expenses for the day I can take a no profit load? The logic I'm seeing here says I can!

My own experience of 14 years sole proprietor says no I won't haul a no profit load! I need a profitable minimum rate per mile! Why should shipper B get load hauled cheap just because I met my daily expenses hauling for shipper A?

In local construction work you can break expenses down into periods of time because that's how they pay!

If you get paid by the mile you figure costs by the mile. Why in the world would a per mile operation calculate costs on a daily basis? Especially when the only costs based on time are licensing and insurance (and possibly truck payment but that disappears after final payment). The major expenses are based on miles - fuel, tires/maintenance, driver pay, taxes.

As far as I'm concerned, all my costs are fixed. Nothing varies much year to year to worry about except for that $5/gal fuel runup. Then you just had to watch your DH miles. FSC covered the paid miles.

The name of the game is to get the highest rate per mile you can. There's always gravy left over.

If you gotta waste time every day figuring if 1.20/mi is gonna break you but the 1.21/mi load will cover your daily expense you need to shoot for higher rates! Try another .25/mi and see if that works and if so don't even consider cheaper loads.

If you can't find profitable loads then you are one of the trucks we statistically call "over capacity"! Park it or sell it!

...and ...oh yes please state your qualifications or name the business school you attended Mr. "advocate"!

[chris1]

Originally Posted by YerDaddy

...and ...oh yes please state your qualifications or name the business school you attended Mr. "advocate"!

First business opened in 1973,still maintain a 20% ownership. Graduated Northwestern in 1975.

[Rev.Vassago]

Originally Posted by YerDaddy

So if I I have met my fixed expenses for the day I can take a no profit load?

You can do whatever you want. That's the neat thing about being in business for yourself.