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What legal form works best for your operation?
There are different ways to set up an owner-operator business. Each business form has its advantages and disadvantages, and one may work better than another for your particular situation. The advice of a CPA, tax attorney or business services provider who specializes in trucking is recommended before a decision is made. Here are the six types of businesses:
SOLE PROPRIETOR. This is a business owned by one person. It is the least expensive, simplest and least regulated type of business structure. Unlike the other forms, there is no formal setup, as it begins when you start earning revenue as an owner-operator. Many leased owner-operators stay with this form, though it has its downsides.
One is liability protection. In the eyes of the law, the owner of a sole proprietorship is the business. In the event of an accident, you could be liable for millions of dollars in damages and medical expenses. That’s why it’s important to carry bobtail insurance (or unladen liability – see Chapter 16).
Also, debt incurred by the business is the responsibility of the owner. If your business gets into financial trouble, creditors can seize your house and other personal possessions.
