| TEXAS
GETS SERIOUS ABOUT DRUG TESTING ENFORCEMENT... Q:
I heard that the State of Texas has now gotten involved in drug testing.
Can you tell me more about what that is all about? INSURANCE ISSUES FOR OWNER OPS An independent contractor is a person who contracts to perform services for others without having the legal status of an employee. Most people who qualify as independent contractors follow their own trade, business or profession – that is, they are in business for themselves. This is why they are called “independent” contractors. They earn their livelihoods from their own independent businesses, instead of depending upon an employer to earn a living. Attempting to determine the “employment classification” of a driver who leases to an interstate motor carrier can be complex and subject to extensive litigation, study, and discussion. The question arises: is this driver truly "independent" or really an employee? This complex question causes many issues related to insurance coverage to also arise, as well as how insurance coverage may affect the ability of independent contractors to survive in their independent business enterprises. When you are a independent contractor, you are your own boss, with all the risks and rewards that follow. Most independent contractors bask in the freedom that comes from being in business for themselves. They would doubtless agree with the following sentiment expressed by one guy that I know who said, “I can choose how, when and where to work, for as much or as little time as I want. In short, I enjoy working for myself.” Independent contractors are the masters of their economic fate. The amount of money they make is directly related to the quantity and quality of their work. This is not necessarily the case for employees. Independent contractors don’t have to ask their bosses for a raise, they go out and find more work. You can often earn more as an independent contractor than as an employee in someone else’s business. For example, a guy I know who drove for a local trucking company decided to become an independent contractor when he learned that the company was billing out his trips at $500, while only paying him $350 per trip. He now charges $450 a trip and earns far more than he ever did as an employee. Today, most motor carriers use owner operators because they do not have to pay half of the trucker's social security taxes, unemployment compensation taxes, provide workers’ compensation or other employee benefits, like health insurance. Being an independent contractor also provides you with many tax benefits that employees don’t get. For example, no federal or state taxes are withheld. This means you can hold on to your money longer, without having to turn it over to the IRS right away. Even more important, you can take advantage of many business-related tax deductions (would you believe there are over 276 legal deductions) that are limited or not available at all to employees. When you are an independent contractor, you can deduct from your income tax any necessary expenses related to your business, so long as they are reasonable in amount and ordinarily incurred by businesses of your type. The one challenge of being an owner operator is surviving a business interruption. Many fail because they do not prepare for possible problems. For some reason, most owner operators consider themselves invincible. While they generally maintain proper truck insurance to cover the public and damage to their trucks, few consider (and many ignore) the consequences which may occur if they become ill or incapacitated, for just a short time or a longer period. Since independent contractors are involved in a business in which they, as sole proprietors, are subject to high incidences of stress, injuries and other problems, they are very vulnerable to a complete shutdown of cash flow if their ability to drive is disrupted. One of the first and most important risks to be analyzed and protected against is injury or death from an occupational accident. The traditional insurance of workers’ compensation is not available to independent contractors. Therefore, the only alternative is an occupational accident policy, in the independent contractor’s name, so it follows him from motor carrier to motor carrier. This type of insurance has essentially grown in popularity, as it generally is less costly than worker's compensation coverage. When it comes to any type of medical expenses, most owner operators miss the boat. Most only deduct that amount which exceeds 7.5% over their adjusted gross income. After all, this number has been drilled into our heads since the beginning of time. This means that they may lose anywhere from $1,000 to $2,000 every year. Today, an owner operator not only needs insurance that covers him while he or she is working, but also while he or she is not able to work. I am pleased to announce that
the NTA has just introduced a new medical plan, which anyone can have
with no medical questions asked, at extremely reasonable prices. There
is also a way that independent contractors can legally deduct 100%
of just about every medical-related expense you can think of. It’s
called a Section 105 Medical Reimbursement Plan. You can find out
more about these new plans by visiting the NTA's new office at 2525
Cherry Ave, Signal Hill, CA or by calling them at (562) 279-0557 or
(800) 805-0040. Until next month, "Drive Safe - Drive Smart!" |