How do I pay my OTR drivers and owner-operators?

The trucking business provides unique challenges for business-owners when it comes time to paying employees who are rarely physically present at the office or main business location on payday. Truck drivers cannot be expected to try to make it back to the office so that they may pickup their weekly or bi-weekly paycheck, hence the challenge to small truck-business owners: How do you pay your over-the-road (OTR) drivers and owner-operators?

Book-Keeping Record System

The first challenge involves calculating the proper payroll numbers based on how you pay your drivers, i.e. by the mile, by number of hours worked, or on a load by load basis.

You should begin by setting up an accounting system that is appropriate for your type of business operation, and also easy to use. There are many good accounting software packages in the marketplace, but few make the grade when it comes to trucking operations.

TSC provides cutting edge accounting capabilities and book-keeping specifically designed for trucking operations. Using TSC, you should be able to run real-time reports that provide answers to such questions like:

  • How much is my paycheck this pay-period?
  • Can I get a summary of all miles ran in this pay-period?
  • Can you print the last 5 pay stubs for a specific driver or employee?
  • Can you print or provide a summary of all activity by certain equipment or drivers?

If your current system cannot answer questions like this in real-time, you should look into TSC -We can help.

Electronic Transfers and Payroll Cards

In my experience the easiest, safest and most cost-effective way to pay remote employees (workers who are not regularly based at the home office), is by payroll card. There are numerous vendors who provide payroll card services.

When selecting a payroll card vendor, choose one that has low transaction costs for both you and the employee. Some vendors charge you to load money on the cards, and also charge the employee for using the card -avoid those vendors. Choose one that has an upfront pricing strategy, and which also provides additional services like fuel and supply purchase management.

Check these tips for choosing a Payroll Card

In the past I have used T-Chek with great success, but there are others like Comdata and FlyingJ PDCA Money Card that work well, and are specific to the needs of the transportation industry.

W2 or 1099?

This is a frequently asked question for small business owners who use independent contractors in their business.

It is critical that you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. If you are an independent contractor and hire or subcontract work to others, you will want to check the IRS website to determine whether individuals you hire are independent contractors (subcontractors) or employees.

Frequently Asked Questions about IFTA

What is IFTA?

IFTA is the International Fuel Tax Agreement. Through the IFTA, member jurisdictions act cooperatively to administer and collect motor fuel use taxes.

Which jurisdictions are members of IFTA?

The 48 contiguous States of the United States and the 10 Canadian Provinces are members of IFTA.

Should I apply for an IFTA license?

If you are based in a member jurisdiction and operate a qualified motor vehicle in 2 or more member jurisdictions, yes. If you usually operate your vehicles only in one jurisdiction, but make occasional trips outside the base jurisdiction, you may elect to purchase trip permits for that occasional travel. Permitting services can usually be contacted from any major truckstop. Contact a permitting service for rates.

What is a qualified motor vehicle?

A Qualified Motor Vehicle is a motor vehicle used, designed, or maintained for transportation of persons or property and:

  • has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds or 11,797 kilograms; or
  • has three or more axles regardless of weight; or
  • is used in combination, when the weight of such combination exceeds 26,000 pounds or 11,797 kilograms gross vehicle or registered gross vehicle weight.

Where should I go to apply for an IFTA license?

You should contact the jurisdiction where you are based. Your base jurisdiction is the jurisdiction where you have your qualified motor vehicles registered, where you have some travel, and where the operational control and operational records are maintained or can be made available.

What if I have qualified motor vehicles registered in more than one jurisdiction?

It is important that you contact one of those jurisdictions. You may be able to consolidate your operations under one license. The jurisdiction you contact will assist you and give you information on how that can be accomplished.